Last week saw gold futures edge lower while recording their largest weekly increase since 2020, following a robust rally. The precious metal dipped over 1% to around $4260 after touching an intraday peak above $4380 in the earlier session.
In a note, senior financial market analyst Kyle Rodda explained that the yellow metal had climbed 7% over the last week as prices skyrocketed in what he referred to as a perfect storm for gold. This comes as trade tensions between China and the United States continue to deepen while expectations of the Federal Reserve reducing interest rates next week also grow.
Rodda explained that the precious metal was flashing a warning signal about what lies ahead, noting that it may be hinting at significant geopolitical risks, an overheated global economy or perhaps merely highlighting speculative excesses in the market that may soon correct.
Since January, the price of gold has risen by about 59%, driven by robust central bank purchases, reductions in rates of interest, and the decreasing value of the greenback, all of which have bolstered the appeal of holding the precious metal. Inflows into gold-backed exchange traded funds have also soared to record highs this past quarter.
According to the Bank of America Fund Managers Survey released earlier this week, gold emerged as the most crowded trade in October, overtaking long positions in the ‘Magnificent Seven’ tech stocks. When surveyed about their portfolio exposure to gold, 39% of fund managers reported holding no gold with another 19% revealing that they maintained about a 2% allocation. Additionally, another 16% revealed that they allocated roughly 4% of their portfolios to gold.
In a note, BofA analysts reaffirmed their bullish stance on gold, projecting a peak of $6,000 per ounce by mid-next year. Meanwhile, Wall Street strategists have been raising their gold price targets. Goldman Sachs now expects prices to reach $4,900 a troy ounce by the end of 2026, quite an increase from its previous $4,300 forecast. JPMorgan analysts likewise anticipate the yellow metal could climb to $6,000 an ounce by 2029.
Investors wishing to invest in the precious metal should consider monitoring interest rate trends, currency movements, and central bank activity, as these remain key drivers of gold’s performance.
However, as with any commodity, its price is shaped by a complex web of political, macroeconomic, financial, and industrial forces that are often unpredictable, meaning sentiment can shift quickly in response to global developments.
Exploration companies, such as Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF), that are looking to identify the next big deposits of gold in North America have an opportunity to attract investors at this time when the price of gold is climbing and current conditions favor its continued bullish run.
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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