Gold likely to rise further if Middle East tensions don’t escalate, analyst says

The gold price forecast (XAU/USD) has been revised up significantly by $200 to $2,500 per troy ounce by the end of the year, notes Carsten Fritsch, commodities analyst at Commerzbank.

Entries are still relatively low

“The price is already at this level, so we don’t expect Gold to make further gains for now. This is because the main driving force behind the more than 20% rise in prices since the end of February has been the expectation of interest rate cuts by the US Federal Reserve. As can be seen from the interest rate cuts of around 100 basis points already priced in by the market by the end of the year, no further impetus is expected here.”

“Furthermore, the high price level is likely to take its toll on physical demand, as was already evident in the second quarter. It also remains to be seen whether central banks will maintain their high level of gold purchases. There was a trend reversal towards net buying of gold ETFs in the summer.”

“However, c. This could change if tensions in the Middle East continue to rise or even escalate. Stronger price growth could then be expected, at least temporarily, due to gold’s role as a safe haven. We expect gold prices to continue to rise in the first half of 2025 on the back of further Fed rate cuts, a US inflation rate that remains above target and a weaker US dollar.”