A few steps away from the $3,000 per ounce, the gold market’s upward momentum is slowing, but not stopping. And, the one piece of good news gold bulls have been waiting for so long is being delivered.
According to the World Gold Council, 48 tonnes of gold worth $4.6 billion flowed into North American-listed gold ETFs last week, the largest one-week net inflow since 2022.
Spot gold prices have continued to move higher this week, last trading at $2,941.40 an ounce on Monday (24 February), up 0.21% on the day. It now looks like it is only a matter of time before the gold price is pushed up to $3,000 per ounce.
Gold has become more favoured by investors as a safe-haven asset due to growing concerns over Trump’s tariffs and geopolitics. Last week, Goldman Sachs Group has raised its year-end target for gold to $3,100 an ounce, stating central bank buying and inflows from ETFs will be the main drivers behind the rise.
Mike McGlone, senior commodity strategist at Bloomberg Intelligence, believes it would not be surprising to see gold ETFs shift from outflows to inflows in 2025, especially if U.S. equities turn from a rapid rise to a fall and the Federal Reserve’s monetary policy of cutting interest rates reverses.
Analysts believe that Western investors are accelerating their purchases of gold ETFs to hedge against economic disruption or inflation caused by tariffs. As a result, there is room for gold investment demand to continue to move higher. In addition, if global central banks (including the Federal Reserve) lower interest rates or print money in response to economic weakness, gold prices are likely to rise as well.
It’s worth pointing out that the national activity index fell into negative territory in January as the U.S. Dallas Fed Business Activity Index fell into contraction territory in February. Market expectations for future Fed rate cuts have risen, with money markets pricing in room for a 50 basis point cut this year, which is in line with the Fed’s current median forecast, which expects two 25 basis point cuts this year.
The dollar index touched its lowest level since 10 December last year during Monday’s session, supporting gold prices to some extent.
Analysts generally believe that in the long run, gold is still a major asset class worth paying attention to. At the same time, China’s domestic insurance institutions pilot investment in gold, is expected to bring hundreds of billions yuan of incremental capital.
