Current Market Overview
Gold is currently seeking support as it aims to conclude a strong year with potential new all-time highs. The recent high for gold (XAUUSD) is noted at $4,525, which is a critical level to watch. Should this level fail, a deeper correction to around $4,380 could occur.
ETF Inflows and Market Performance
According to the World Gold Council, global physically backed gold ETFs have experienced a sixth consecutive month of inflows, with $5.2 billion added in November. Although this figure is lower than previous months, it remains significantly above the 2024 monthly average of $292 million. The total assets under management in gold have reached $530 billion, marking a 5.4% increase for the month and setting a new monthly high. Holdings have risen by 1% to 3,932 tons, the highest month-end value recorded.
The inflows in November were primarily driven by European and Asian investors, while North American inflows saw a notable slowdown compared to the previous month. The heightened interest in gold led to record North American purchases in October, with many investors likely holding onto these assets as the year comes to a close.
Comparative Performance of Precious Metals
This year has seen both gold and silver achieve their best annual performance since 1979, with silver notably outperforming gold. This shift has attracted investor interest towards silver, which is perceived to offer similar safe-haven potential as gold but over a shorter timeframe. The demand for silver is also being bolstered by its applications in industries such as electric vehicles (EVs) and solar energy.
Future Price Predictions
The Federal Reserve's recent signals regarding potential rate cuts have positively influenced the outlook for metals. However, global economic data from China, the U.S., and other nations suggests looming recessionary pressures. Near-term risks for gold may include geopolitical developments, such as a potential peace agreement between Ukraine and Russia.
Investment banks have made various forecasts for gold prices in the coming years. Goldman Sachs predicts a price of $4,900 per ounce for next year, while JP Morgan is more optimistic, projecting an average price of around $5,055 per ounce by the end of 2026. Bank of America anticipates a peak of $5,000, and Deutsche Bank estimates an average of $4,450.
The potential for price increases largely hinges on central bank policies, with recent deflationary trends posing risks. While falling interest rates could diminish demand for inflation hedges, any economic weakness globally may reignite concerns over debt in major economies.