Author: Yang Dapan
On Friday, gold hit a new all-time high, breaking through the $3,000 mark that many Wall Street banks had forecast, up nearly 15% since the beginning of the year.
WisdomTree's commodity strategist Nitesh Shah said: "The risk for GOLD is slightly on the upside, as the market's confidence in GOLD is strong at the moment, and this confidence may persist if this erratic policymaking continues."
US President TRON's tariffs have played an important role in increasing demand for GOLD. The global trade war has disrupted financial markets and raised concerns about an economic recession, and as TRON threatened on Thursday to impose a 200% tariff on alcohol imports from Europe, this trade war is escalating.
Ole Hansen, head of commodity strategy at Saxo Bank, said that "the increase in ETF holdings driven by momentum and safe-haven demand has also supported the GOLD price."
The world's largest GOLD-backed ETF, SPDR GOLD Trust, said its holdings were 905.81 metric tons, previously reaching the highest level since August 2023 at the end of February.
Although all eyes are on this target, one bank says that even if this level is breached, the rally in GOLD is far from over.
The commodity team at Macquarie Bank, led by Marcus Garvey, updated their 2025 GOLD price forecast on Thursday, now predicting the precious metal will surge to a high of $3,500 per ounce in the third quarter, matching the inflation-adjusted historical high set in January 1980.
Macquarie's latest price forecast update comes as GOLD is already trading at the bank's second-quarter target.
Analysts say that with the bank's economists expecting global economic growth to slow to 0.3% in the third quarter of this year, GOLD remains an important safe-haven asset.
Macquarie analysts said in the report: "We believe the strength in GOLD prices so far, and our expectation of further upside, is primarily due to investors and official institutions being more willing to hedge risk. This is reflected in it having reached nominal all-time highs (on February 24 at $2,956 per ounce), even with the relatively high opportunity cost of holding GOLD (as a zero-yielding asset)."
In addition to the safe-haven appeal of GOLD, Macquarie Bank also believes that the deteriorating outlook for the growing US government debt is driving the rise in GOLD prices. With Congress failing to pass a new appropriations bill, the US government faces the potential for another shutdown. Looking ahead, analysts say they expect the US government to be unable to significantly reduce spending.
Analysts said, "While the outcome remains inherently uncertain, our base case is that the Congressional Budget Office's projections for the budget deficit will deteriorate relative to current law; tariff revenues, savings from the DOGE, and potential Medicaid cuts will not fully offset the extension of the TCJA (which could add 1.5 percentage points to the deficit). Against this challenging fiscal backdrop, and that of many developed economies, GOLD prices may remain at historical highs."
Garvey's team also expects that if the TRON administration pressures the Federal Reserve to cut interest rates, thereby challenging the Fed's independence, the rally in GOLD will accelerate. The Federal Reserve has recently shifted to a more neutral stance, saying that given the relatively healthy US labor market and persistent inflation risks, the Fed is in no rush to cut rates.
Although GOLD is about to reach an important milestone, Macquarie Bank points out that there is very little bubble in the market. They added that with demand for GOLD-backed ETFs down 20% from the 2020 record high, the market still has ample room for further upside.
Macquarie's commodity analysts believe that the downside risk for GOLD this year is very small.
They said, "Ultimately, to change this environment of structural support for GOLD, it would likely require a shift in market expectations for the US deficit path, or positive reasons for long-term real yields to rise. For example, stronger trend productivity growth, thereby lifting trend GDP growth. These are plausible scenarios, but not our current base case."
Although GOLD is expected to continue outperforming the broader market in the precious metals space, Macquarie is also bullish on SILVER, with the bank's analysts raising their SILVER forecast from $31 per ounce previously to $33.50 per ounce in the third quarter.
However, Macquarie still forecasts the GOLD-SILVER ratio to remain elevated near 92.
The Australian bank expects that the fundamental imbalance between SILVER supply and demand will continue to support its price this year and in 2026.
Analysts said, "The SILVER deficit is still too large to be offset by supply growth. Projected at 118.9 million ounces in 2024 and 157 million ounces in 2025, the potential physical market is expected to remain tight within our current forecast window. Considering our surpluses of 50 million ounces in 2025 and 75 million ounces in 2026 before investment, moderate coin and bar demand alone can sustain healthy SILVER prices. This suggests that the return of stronger financial buying, including through derivatives positions, still has the potential to drive a significant upside in SILVER prices."
