CIO continues to recommend gold’s hedging qualities amid economic and geopolitical uncertainties. (UBS)
Commentators have argued such policies could see higher inflation and slower global growth—so as gold is viewed as the ultimate hedge; this explains why it can rally alongside a stronger US dollar and higher Treasury yields.
Beyond the election, other demand factors also support the gold outlook. The World Gold Council reported a 5% year-over-year increase in gold demand for the third quarter of 2024, reaching a record quarterly total of 1,313 metric tons, painting a supportive backdrop. Notably, exchange-traded fund (ETF) demand turned positive, with Western investors stepping in as Asian investors pulled back, though October data show a resurgence in Asian demand. Central bank purchases continued, albeit at a more moderate pace, with annual demand likely near the lower end of our expectations of 900-950 metric tons.
Takeaway: This rally aligns with our bullish view on gold since the fourth quarter of 2023, and we retain an attractive view on the metal, with a target of USD 2,900/oz by September 2025. We continue to recommend gold’s hedging qualities amid economic and geopolitical uncertainties. As it pertains to the US election, we believe a Trump win could push prices toward our USD 2,900/oz target more quickly, while a Harris win may see a temporary dip to USD 2,600-2,700/oz.
Main contributor – Mark Haefele
Original report - Big tech earnings underscore robust AI growth, 4 November 2024.
