UBS sees extra upside for gold costs as central banks stay key consumers

Investing.com — Gold demonstrated a powerful efficiency in 2024, marking a 27% acquire and reaching an all-time excessive of USD 2,788/oz on October 30. This improve represents the fifth straight yr of beneficial properties for the valuable metallic, with solely cocoa and occasional surpassing it inside the commodity sector.

In line with UBS, central banks continued to be the mainstay of gold demand, with their purchases and the heightened world danger premiums driving gold costs. Regardless of the breakdown within the relationship between gold and actual rates of interest, these components have stored the gold market buoyant.

Preliminary estimates point out that central financial institution demand for gold in 2024 was round 1,000 metric tons (mt), barely decrease than the earlier two years. The yr 2022 noticed the best annual buy in historical past at 1,082 mt.

Diversification has been an important think about gold’s record-breaking rally. This pattern is anticipated to proceed because of the ongoing commerce and geopolitical uncertainty, together with issues over US authorities debt.

Consequently, sturdy official sector gold purchases and diversification demand from much less rate-sensitive components of the funding neighborhood are anticipated to proceed. This results in a maintained lengthy place on gold within the world technique, with a goal of USD 2,850/oz by the tip of the yr.

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