Gold on Course to Equal its Stellar Performance From the 70s

Last week, gold’s price hovered around $4,000 an ounce, showing little movement after the sharp decline seen last month and prompting fresh debate about its future trajectory. Despite the recent dip, the metal is still on course for its strongest annual performance since the 70s. This is primarily thanks to strong buying from central banks, growing interest in gold-backed ETFs, and steady demand for bars and coins. 

Still, prices sit roughly 9% below the record level of more than $4,350 reached in September. 

Macquarie analysts argue that the precious metal had already reached its high point for now. They pointed out that several central banks moved to cut interest rates before the Federal Reserve, which has yet to signal whether another adjustment is coming in December. 

Since lower rates usually make gold more attractive compared to interest-earning assets, the shift matters for its outlook. 

Chief economist at the firm, Ric Deverell, explained that with most easing cycles wrapping up, real rates still elevated, and America-China tensions calming for the moment, they believe gold’s short-term top is likely in place and that prices may slip over the next year. He added that any decline should be gentler than past downturns, and that gold will probably stay well above where it ended 2023 throughout the current presidential term. 

For context, gold was trading near $2,000 per ounce about two years ago. The analysts also cautioned that renewed geopolitical strain or worries over the American government’s finances could give the metal another lift. 

Last month, the precious metal suffered its sharpest one-day fall in more than ten years, abruptly halting its powerful surge. Even so, the metal still finished the month about 5% higher. 

A report from the World Gold Council released recently noted that the dollar’s recent strength largely drove gold’s swing away from its record high. Still, several Wall Street firms think gold could climb from where it sits now before the year ends. 

Earlier this week, UBS analysts stated that although prices have slipped back to roughly $4,000 from their peak above $4,300, they still expect gold to reach $4,200 over the next year. They added that rising political or market risks could push the metal toward their higher target of $4,700. 

An even more bullish outlook was issued by Goldman Sachs, who forecast that gold could hit $4,900 per ounce by the end of next year. They argued that while the recent selloff may have been influenced by unwinding bullish options bets, persistent structural demand remains intact. 

The persistence of favorable conditions fueling the price increases seen in the gold market are likely to drive more investment towards players in the gold industry like Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) as more investors look to benefit from this rallying precious metal. 

NOTE TO INVESTORS: The latest news and updates relating to Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) are available in the company’s newsroom at https://ibn.fm/ATBHF 

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