Gold predicted to climb higher than expected as records shatter (original) (raw)

With the US presidential election in focus, Western investors are returning to the gold market, according to Goldman Sachs Research. Gold may offer hedging benefits against potential geopolitical shocks, including potential rises in trade tensions, Federal Reserve subordination risk, and debt fears.

ETF holdings of gold may climb

Many Western investors have been nervous about chasing gold prices higher, Thomas says. Some think they’ve missed the rally and are wary of buying gold at all-time highs. Some are also struggling to make sense of gold prices, which in 2022 began to diverge from their traditional relationship with interest rates.

That said, Goldman Sachs Research expects gold holdings in Western exchange-traded funds to gradually increase as interest rates fall, which would be in line with their historical relationship. Even as central bank buying of gold may be moderating, there could be some competition for gold bullion between central banks and Western investors as gold ETF holdings begin to climb.

“Long-term investors are now interested in holding gold because rates are lower,” Thomas says. “At the same time, central banks holdings are probably still going to pile up.”

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This article was updated on October 30, 2024 to reflect Goldman Sachs Research’s revised forecast for gold.