(Kitco News) - Last week, I wrote that the gold market was looking a little tired but could be carried higher due to growing investment demand. Apparently, I shouldn’t have been so guarded with my bullish optimism.
This week, the gold market not only held initial support above $3,000, but many are now looking toward $3,100 an ounce, which could prove to be just another small speed bump in this rally. The gold market is on track to end the first three months of the year with an impressive 18% gain—its biggest quarterly rally since July 1986.
According to market analysts, safe-haven demand continues to drive investment capital into gold as President Donald Trump’s import tariffs and the ensuing global trade war have pushed equity markets into correction territory. While gold is seeing its best quarter in 39 years, the S&P 500 is facing a 5% loss—its worst quarterly performance since July 2022.
The good news for gold is that there’s still plenty of uncertainty and fear to drive prices even higher. Next week, Trump is set to launch targeted tariffs globally, broadening the already damaging trade war.
This past week, commodity analysts at Bank of America increased their price forecast for the next two years and ultimately see prices hitting $3,500 by 2027. However, given the current rally, that outlook feels a little tame.
Bank of America isn’t the only one raising expectations. Goldman Sachs now expects gold prices to end the year at $3,300 an ounce. French bank Société Générale also sees gold hitting that target in 2025. Their analysts even see a potential path to $4,000 an ounce if geopolitical tensions escalate.
An interesting theme among these updated bank forecasts is the growing uncertainty surrounding the U.S. economy. Bank of America said that Trump’s “America First” policies could transform into “America Alone” policies. They added that this shifting global narrative will encourage more central banks to buy gold and diversify away from the U.S. dollar.
Meanwhile, SocGen said they have doubts about American exceptionalism. In their Multi-Asset Portfolio strategy, they are rotating out of U.S. assets and into European equities. They’re also holding fewer U.S. dollars and increasing their exposure to the Japanese yen and euro. The analysts continue to maintain 7% of their portfolio in gold.
“Gold remains a strong momentum play, in a context where the redefinition of geopolitics under the US administration triggers significant policy reactions,” the analysts said.
It’s not just gold that’s rallying—silver is also attracting a lot of attention as prices look to end the week above $34 an ounce, with many now targeting $35 and higher.
So sit back and enjoy the ride.
That’s it for this week. Have a great weekend!
