①David Wilson, Head of Commodity Strategy at BNP Paribas, stated this week that the current rally in gold prices is "justifiable" given the persistent macroeconomic and geopolitical risks; ②Wilson predicts that gold prices could rise to $6,000 per ounce by the end of the year, and the gold-to-silver ratio will also increase further.
Cailian Press, February 11 (Editor: Xiaoxiang) David Wilson, Head of Commodity Strategy at BNP Paribas, stated this week that the current rally in gold prices is "justifiable" given the persistent macroeconomic and geopolitical risks. Gold prices may climb to $6,000 per ounce by the end of the year, and the gold-to-silver ratio will also increase further.
Wilson noted that although the gold-to-silver ratio is still below the average level of over 80 times seen in the past two years, it has recently rebounded somewhat.
"I believe there is still room for further divergence (between gold and silver prices)," he said during a television interview. "For me, gold holds a unique value, while silver cannot provide the same degree of risk hedging function."
The outlook for gold continues to be supported by central banks' ongoing purchases. For example, Poland’s central bank announced last month an additional purchase plan of 150 tons of gold – after being the largest gold buyer last year; additionally, the People's Bank of China also increased its gold reserves for the 15th consecutive month in January, demonstrating resilience in official demand.
Wilson added that inflows into gold ETFs have remained stable – briefly retreating only during last week’s market correction before rising again.
Meanwhile, driven by strong physical buying in Asia, silver has experienced significant volatility over the past few months. However, Wilson believes that signs of weakness are already emerging in the physical silver market. The upcoming Lunar New Year holiday may further dampen China’s demand for this white metal.
Notably, several banks and asset management institutions, including Deutsche Bank and Goldman Sachs, remain generally optimistic about the prospects for gold, believing that long-term demand drivers will support gold prices.
Roukaya Ibrahim, Chief Commodity Strategist at BCA Research, noted in a report on Tuesday that investment demand for gold ETFs, particularly from Asian regions such as China, has become a key driver of gold prices over the past few months. Over the past year, inflows into gold ETFs accounted for the majority of total investment demand growth, far exceeding investments in gold bars and coins.
Ibrahim believes that fund flows into ETFs are "relatively more volatile" compared to demand for gold bars and coins, which may help explain the sharp fluctuations recently seen in the gold market. However, she also pointed out that emerging market central banks will continue their reserve diversification process and accumulate more gold during price pullbacks. Therefore, central bank demand is likely to "provide a floor for gold prices," "preventing any pullback from evolving into a prolonged bear market."
Ibrahim stated that the current gold bull market 'is not abnormal by historical standards.' In terms of gains, this round of the gold bull market still lags behind the bull markets from 1971 to 1974 and from 1976 to 1980.
