Gold Prices Resume Growth as Analysts Eye Next Targets

Gold prices rose 1% on Monday, marking a 16% gain for the month. The rally is driven by the US national debt surpassing $40 trillion, which undermines confidence in the dollar, alongside weak employment data and stabilizing inflation that somewhat distance the prospect of interest rate hikes.

Four factors supporting the rally

Keith Lerner, Chief Investment Officer at Truist, highlighted several points supporting the asset's renewed strength. Among these is the US Treasury's decision to increase long-term bond purchases, which may ease pressure for interest rate hikes. He also noted the resilience of demand from global central banks, which continue to increase their gold reserves despite earlier concerns regarding a slowdown in purchases.

Lerner also pointed to stabilizing inflation and weak employment data as drivers for further gains. Furthermore, the technical trend has improved: the gold price has returned to trading above the 200-day moving average, a positive signal indicating that the negative momentum of recent price declines has faded.

Analysts' outlook

As a reminder, the sharp rise in gold began in March 2024 with the breach of the $2,000 per ounce historical barrier. From there, the price saw a meteoric rise of over 150% in less than two years, peaking above $5,500 per ounce last January. However, since March, the asset has undergone a significant correction of about 27%, which temporarily pushed the price below the $4,000 threshold.

Regarding forecasts for the remainder of the year, most analysts expect the trend to remain positive, with an average target of $5,300. JPMorgan remains the most optimistic, setting a target of $6,000 per ounce.