Gold Prices Soar to Record Highs, But Analysts Are Still Making Bullish Calls

Due to uncertainties surrounding the US election, the escalation of conflicts in the Middle East leading to a surge in demand for safe havens, and a loose monetary policy environment, people are flocking to gold, the safest asset: spot gold broke through $2,700 per ounce for the first time on Friday, with the record high set just earlier in the day being refreshed again.

Spot gold and COMEX gold futures closed at historical highs: spot gold rose to $2,704.36 per ounce, while COMEX gold futures rose to $2,718.3 per ounce.

Earlier, Israel claimed that its military had killed Hamas leader Yahya Sinwar. Daniel Hynes, a senior commodity strategist at ANZ Bank, said that the demand for safe havens has been boosted amid rising tensions in the Middle East.

In addition, Nitesh Shah, a strategist at WisdomTree, also said: On top of the concerns in the Middle East, you are also nearing the U.S. election, which is looking like a very closely contested election. And that generates a whole host of uncertainty, and gold often is the place to go in times of uncertainty.

Analysts led by Mark Haefele, Chief Investment Officer of UBS Global Wealth Management, said in an email: We anticipate uncertainty and volatility to rise until the next US administration is settled. They suggest that in a turbulent trading environment, gold and oil can be effective portfolio hedges.

In addition, the global easing cycle led by the Federal Reserve is also a major factor in the rise of gold prices. Currently, many investors are betting that as the Federal Reserve shifts to a loose monetary policy and US economic growth slows down, it will help drive gold prices higher.

At the same time, central banks worldwide have been increasing their gold reserves, and the purchase volume of gold in the first quarter of this year has set a historical record compared to the same period last year.

Finally, the Trump trade is also one of the drivers behind the rise in gold prices. Recently, the support rate of the Republican presidential candidate Trump has risen significantly, and the market increasingly believes that Trump will win the US election next month.

Kelvin Wong, a senior market analyst for the Asia-Pacific region at OANDA, said, With uncertainty surrounding the US election, investors are seeking gold as a safe haven. Trump's tenure should support gold, as he may intensify trade tensions and expand budget deficits.

More Bullish Calls

Even though the price of gold can be said to be soaring this year: the rise in London spot gold in the first three quarters of this year has reached 30%, which is expected to break the record for the largest annual increase ever (30.86% in 2007), Wall Street is still full of bullish calls.

Representatives at the annual meeting of the London Bullion Market Association (LBMA) predicted that gold prices are expected to rise to $2,941 per ounce in the next 12 months, which means there is still nearly a 10% increase from the current gold price level.

Ole Hansen, head of commodity strategy at Saxo Bank, said: The LBMA poll that came out from Miami earlier in the week, where the base look for gold prices was to rally near $3,000 in the next year and silver doing even better, I think that potential is also just attracting a bit of attention.

Goldman Sachs analysts recently raised their gold target price for early 2025 from $2,700 per ounce to $2,900, noting that central banks' gold purchases will remain at a structurally high level.

Bank of America strategists also said that as other traditional safe assets face increasing risks, the attractiveness of gold is increasing. In their opinion, Gold seems to be becoming the last 'safe-haven' asset, driven by factors including central banks and other traders increasing their positions.

Bank of America reiterated its target of $3,000 per ounce for gold prices by the end of next year, which means gold prices will rise by 11.1% compared to Thursday's level.