Bullishness on Gold is the Consensus Call
A continued gold rally is now the consensus call amongst private banks, citing economic uncertainty and central bank demand as the primary drivers.
After surpassing $3,000 per ounce for the first time ever on March 14, gold continues to gradually break records with the latest high set at around $3,050 on March 20 before easing slightly lower.
Will the precious metal continue its historic rise? Numerous private banks believe this to be the case, making a continued gold rally the industry’s consensus call.
Policy Risks
One of the most commonly cited drivers is the backdrop of economic uncertainty and higher inflation in the midst of an intensifying global trade war under US President Donald Trump.
«As tariff noise continues, risk-off sentiment could persist. Gold is likely to be supported or pushed higher, US equities may be choppy in the near term, and global equities (particularly in Europe and Asia) are likely to see weakness once/if tariffs kick in,» said a note by Alex Wolf, J.P. Morgan Private Bank's head of Asia investment strategy.
Not Only the US
The US is not the only country whose policies are shifting the outlook. Germany has also come into the spotlight after it introduced landmark reforms including changes to a debt brake that allow greater spending alongside a 500 billion euro ($542 billion) infrastructure and climate fund.
«Even though gold has already seen a strong rally, we continue to expect the yellow metal to head for $3,300 as inflation rebounds in the months ahead, driven by not only American tariff policy but also Germany’s historic fiscal expansion,» according to UBP’s monthly house view report. «As a result, investors have further opportunities to increase existing positions on gold.»
Buyer Demand
In addition to the economy, buying demand is another commonly cited driver with much focus being placed on continued purchases by central banks.
«Central bank buying is also crucial as a structural support for the market. Notably, the People's Bank of China and the Central Bank of Poland – the top buyer in 2024 – continue to boost their gold reserves. Like 2024, we see signals that purchases by reserve managers could be again close to the levels of recent years (around 1,000 metric tons annually),» said a note by UBS which lifted its target price to $3,200 per ounce.
«We remain bullish on gold on structural demand from central banks,» added Standard Chartered in an investment note. «Gold and commodities are likely to do well in a stagflation scenario,»
