Source: Jin10 Data
Author: Xiao Yanyan

According to Macquarie Group Ltd., as the Fed cuts interest rates and central banks increase gold reserves, gold still has room to rise next year and may even set a new historical high.

Analysts, including Marcus Garvey, stated in a report adjusting price forecasts that due to the strengthening of the US dollar, gold prices may face difficulties in the first quarter of 2025, but thereafter, its upward trend will continue to expand. They mentioned, if Chinese demand picks up, or the policies of the re-elected US President Trump could worsen the US fiscal outlook, then gold may "quickly" challenge the $3,000 per ounce level.

Gold is one of the best performing commodities this year, with a 28% increase and a series of records set. Central bank bids, the Fed's interest rate cuts, and the rebound in gold-supported exchange-traded fund (ETF) holdings have all supported the rise in gold. Banks, including Goldman Sachs and UBS Group, believe that gold prices will continue to rise next year.

Macquarie analysts stated, "Gold ETF holdings are still 25% lower than their peak in 2020, indicating significant purchasing potential if conditions allow. In this scenario, we believe that rate cuts are key to reducing the attractiveness of money market funds and other savings products."

Macquarie stated that the average gold price in the first quarter of 2025 would reach $2,650 per ounce, 1.9% higher than previous forecasts. From April to June, the average gold price will reach $2,800, a 12% increase from the last estimate. After this period, gold may lose some attractiveness.

The current spot gold price is around $2650. Since the beginning of last week, the price of gold has been fluctuating narrowly as investors look for new catalysts. Due to the rebound of the US dollar after Trump's victory in the election and the easing of tensions in the Middle East, the price of gold has dropped by 5% from its historical high at the end of October. However, supported by the Fed's rate cuts and central bank bid, the price has still risen by 28% this year.

It is worth noting for short-term investors that Daniel Ghali, Senior Commodity Strategist at TD Securities, specifically pointed out that the price of gold is still in a narrow trading range, but the recent liquidity situation is quite interesting.

He said, "First, our advanced position analysis shows that macro funds have re-accumulated a significant portion of their extreme gold positions held before the US election night. Given the significant differences in Fed policy outlook, this is surprising as there is no longer a risk of 'excessively loose' policy on the Fed policy horizon, indicating more vulnerability."

He continued, "CTAs have been hit on two fronts, but the price action has now unlocked a scenario that could see significant liquidation in the coming week, with the Non-Farm Payrolls report coming up and the December FOMC meeting shortly after. After all, before the risk balance shifts back to gold, there might be another shoe to drop."

Editor/Jeffy