Gold Price Targets Go Higher

The rally to $3,000 an ounce for gold has caught even bullish forecasters by surprise for its speed and strength. Even so, many are raising their predictions for the gold price, which is what analysts have been doing over the past year as the precious metal has continued to fly past new mileposts.

“For it to hit $3,500/oz, investment demand would need to rise 10 percent,” Bank of America analyst Michael Widmer writes. “That’s a lot, but not impossible.” Given that China recently permitted insurers to invest in precious metals, there could be as much as 300 tons of additional demand coming to the market, which may push the gold price higher, according to Widmer.

Macquarie Group, an Australian-based investment bank, recently raised its prediction for gold to $3,500 from $3,000 an ounce. “We do still think there are some materially bullish developments likely to come for gold,” said Marcus Garvey, Macquarie’s head of commodities strategy. “I don’t really see things that would suggest to us that this rally is in an area that’s become frenzied or overextended.”

Goldman Sachs recently raised its price target to $3,100 an ounce, and now sees increasing chances of gold moving far higher, even if a cease-fire were to halt the war between Russia and Ukraine. “We believe that central bank gold buying will remain structurally higher,” Goldman argues, adding that the Trump administration’s shifting positions on tariffs will keep driving investors to the safety of gold.  “U.S. policy uncertainty may support investor demand,” writes Goldman.

UBS Global Wealth Management has raised its price target for gold By $200 an ounce to $3,200 over the next 12 months due to the rising chance of an extended trade war that will encourage safe haven demand for gold. “We continue to believe allocating around 5 percent to a U.S. dollar balanced portfolio to gold is optimal from a longer-term diversification standpoint,” advises UBS.