Gold Enters New Bull Market, May Hit $3,000: Analysts
Recently, as gold continues to climb and repeatedly sets new historical highs, analysts have pointed out that the price of gold is expected to continue to rise, and may even break through $3,000.
Asset management company Sprott Asset Management stated that after reaching historical highs, gold has entered a "new bull market," which aligns with the views of other analysts who predict that gold prices will continue to climb to new heights.
Paul Wong, a market strategist at Sprott Asset Management, noted that "factors such as central bank purchases, rising U.S. debt, and the potential peak of the U.S. dollar have propelled gold into a new bullish phase."
Wong explained that the increase in the U.S. debt-to-GDP ratio typically triggers concerns about debt sustainability, currency devaluation, and debt monetization, which in turn push up gold prices.
The U.S. Congressional Budget Office estimates that the proportion of public debt to GDP will rise from 98% in 2023 to 181% in 2053, reaching the highest level in U.S. history.
With the increase in debt, the government may resort to printing money to address deficits, which will weaken the value of the currency and enhance the appeal of gold as a reliable store of value.
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According to data from the U.S. Congressional Budget Office, U.S. public debt is expected to rise from 98% of GDP in 2023 to 181% in 2053, setting a historical record.
He added that inflationary pressures and uncertain macroeconomic conditions facing the global economy mean that central banks and investors may allocate more funds to precious metals.
Data from the World Gold Council shows that in the first half of 2024, global central banks' net gold purchases reached 483 tons, which is 5% higher than the historical record set in the first half of 2023.
Analysts generally predict that gold prices will continue to rise, and may even break through $3,000. Some of these analysts expect that gold prices will exceed $2,800 within the next three months.Commodities strategist at Bank of America, Michael Widmer, has noted that due to rising government debt levels and geopolitical uncertainties, the price of gold "looks better than ever" and predicts that the price of gold will approach $3,000. Israel and its adversaries, Hamas and Hezbollah, have vowed to continue fighting in Gaza and Lebanon, making the prospect of resolving the ongoing Middle East conflict seem slim. Heightened geopolitical tensions typically lead investors to flock to safe-haven assets like gold to cushion against risks and instability in global markets.
Citi analysts also maintain their stance that gold will reach $3,000 within the next 6 to 9 months. If the situation in the Middle East escalates, causing oil prices to soar, the price of gold will receive further support.
Despite a decline in retail demand in China over the past three months, Citi points out that the price of gold has still performed "very well," indicating that buyers are willing to pay higher prices.
Meanwhile, Vivek Dhar from the Commonwealth Bank of Australia stated in a report on Monday that due to the continued weakness of the US dollar, he expects the price of gold to average $3,000 by the fourth quarter of next year.
However, Dhar forecasts that the price of gold will average $2,800 this quarter. Citi has also recently raised its forecast, believing that gold will reach $2,800 within three months.