(Kitco News) - The gold market is on a seemingly unstoppable rally. It has taken less than two weeks for prices to reach another important milestone after breaking above $3,000 an ounce. Some analysts are even giving up on forecasting prices in this environment.
Last week, analysts from Goldman Sachs, Société Générale, and Bank of America raised their price forecasts, identifying $3,300 as the next major target by the end of the year.
The new outlook comes as gold prices start the week on solid footing. June gold futures were last traded at $3,160 an ounce, up 1.47% on the day. At current prices, gold is less than 4% away from the newly revised targets.
In an interview with Kitco News, Chris Mancini, Associate Portfolio Manager of the Gabelli Gold Fund (GOLDX), said he is not paying much attention to prices and is instead focused on the trend, which is currently upward.
“In the big picture, the price of gold can still go higher, and there is good reason why we are seeing this rally,” he said. “Gold is overbought, but you can’t ignore demand. This economic uncertainty is not going to abate.”
Analysts have been significantly bullish on gold in recent weeks as the global economy braces for President Donald Trump to unleash new import tariffs worldwide. Fears of an intensifying global trade war are driving more capital away from U.S. equity markets.
They have noted that the decline in equity markets is generating significant safe-haven demand for gold. While gold is posting solid gains, the S&P 500 is currently trading at 5,540 points, down nearly 0.70% on the day.
“Investors are increasingly concerned about the potential impact of Donald Trump’s tariffs, fearing that such policies will lead to low growth, higher inflation, reduced international trade, and a less predictable global order,” said Ricardo Evangelista, Senior Analyst at ActivTrades, in a note. “As a result, risk-related assets, such as stocks, have been suffering as investors close positions and seek refuge in safe-haven instruments like gold.”
“At the same time, the U.S. dollar remains under pressure, as fears of a U.S. economic slowdown fuel expectations that the Federal Reserve will soon start cutting rates again,” he added. “This dynamic offers additional support to the bullion price due to the inverse correlation between the two assets. Against this backdrop, the short-term outlook remains positive for the precious metal.”
David Morrison, Senior Market Analyst at Trade Nation, said that although gold is currently the preferred asset to own, investors should not chase the market at these elevated prices.
Currently, gold is up 20% so far this year, marking the biggest quarterly gain in 39 years.
“Given that—and given that gold hasn’t had a significant pullback in over four weeks—it feels as if the air is pretty thin up here above $3,100. The daily MACD is, guess what, very overbought,” he said in a note. “But it is still below the highs from mid-February, which came ten days before gold’s last significant sell-off. If there is a sell-off, then it looks as if $3,000 will be the first significant level of support.”
