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Gold (GC=F) prices are on track to achieve their eighth consecutive week of gains, with forecasts for further upside potentially reaching $3,100 per troy ounce by year-end. Daan Struyven, Goldman Sachs co-head of global commodities research, joins Market Domination hosts Julie Hyman and Alexandra Canal to discuss the details.
Struyven emphasizes how the shift in central bank behavior stems from Russia's central bank reserves being frozen in 2022. This influenced investments in the US and Europe.
"It was a wake-up call to [emerging-market] EM central bank reserve managers because they realized that their assets would not necessarily be risk-free," he explains. "So they have shifted part of their reserves to buying gold, an asset which cannot be frozen or confiscated."
"We have seen a five-fold increase in the rhythm of gold purchases by central banks," Struyven adds. "We think this is a structural shift, and we expect ongoing solid above-trend central bank purchases of gold to continue to push gold prices higher."
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Additionally, Struyven speaks on lower interest rates and ongoing policy uncertainty contributing to higher demand for gold as a hedge, concluding, "If policy uncertainty were to remain at high levels ... our model would point to a gold price by year-end of up to $3,300 per troy ounce."
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This post was written by Josh Lynch