Fed’s Powell opens door to potential rate cuts at Jackson Hole
On Monday, Cantor Fitzgerald updated its gold price projections, significantly raising the near-term and long-term estimates. The research firm now expects near-term gold prices to reach $3,600 per ounce, up from the previous estimate of $2,400. Additionally, the long-term price deck has been lifted to $3,000 per ounce from $2,200. Silver estimates have also been increased to $36 per ounce in the near term and $33 over the long term, from previous estimates of $29 and $25, respectively.
The revision in gold and silver price estimates by Cantor Fitzgerald has led to positive revisions for related equity price targets. The firm’s analysts note that gold has experienced a remarkable rally, climbing +29% year-to-date, marking the best start to a year since 1986. According to InvestingPro data, the SPDR Gold Trust (P:GLD (NYSE:GLD)) has gained 26.43% year-to-date and is currently trading near its 52-week high at $315.71. With the total market capitalization of gold at approximately $22.9 trillion, the recent surge in prices is considered atypical, though not unprecedented.
Cantor’s report points to several factors that are expected to continue supporting gold prices. One of the key drivers is the potential shift of large capital flows from U.S. treasuries and the dollar into physical gold due to U.S. tariffs on both allied and adversarial nations. Evidence suggests that this rotation has already begun and is likely to accelerate. Additionally, the firm anticipates that the net impact of tariffs and retaliatory tariffs will rekindle inflation globally and lead to rising unemployment in the near term, weakening business confidence in what is described as a stagflationary setup. Historically, such conditions have been extremely bullish for gold prices. InvestingPro data shows GLD’s beta of 0.17, indicating significantly lower volatility compared to the broader market, making it an attractive hedge in uncertain times.
The firm also highlights the role of central bank buying, which primarily drove a +27% rally in gold prices last year, outperforming the S&P 500’s +24%. After four years of outflows, physical gold ETFs have reported consolidated net inflows of $21.1 billion (7.3 million ounces of gold) year-to-date, indicating that both retail and institutional investors have turned net buyers. Cantor’s analysts remain constructive on the direction of gold prices and believe the factors supporting the precious metal are poised to strengthen further.
In other recent news, gold stocks in Comex warehouses, part of the CME Group (NASDAQ:CME), have reached a record high of 43.3 million troy ounces, valued at $135 billion. This increase is attributed to potential U.S. import tariffs, which may limit gold shipments from other countries. Meanwhile, the deVere Group has forecasted that gold prices could hit $3,300 per ounce by the second quarter of 2025, driven by geopolitical uncertainties and inflationary concerns. Additionally, Jeffrey Gundlach of DoubleLine Capital has projected that gold prices might rise to $4,000 per ounce, highlighting the ongoing bull market for the metal.
Gold exchange-traded funds (ETFs) also recorded their largest weekly inflow since March 2022, with 52.4 metric tons worth $5 billion added, according to the World Gold Council. This surge in investment coincides with gold reaching a record price of $2,956.15 per troy ounce. U.S.-listed funds led this inflow, marking a significant shift from January when these funds experienced outflows. As central banks worldwide accelerate their gold purchases, the People’s Bank of China has increased its holdings for the fourth consecutive month, reflecting a shift in international reserve strategies. These developments underscore the growing interest in gold as a hedge against economic and geopolitical uncertainties.
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