Market expects peak in gold and silver

Gold prices have surged to record highs, with spot gold hitting a new high of $2,449.89 an ounce on Monday, while silver, like copper, reached multi-year highs early last week. All three precious metals are still trading near record levels, with analysts expecting prices to strengthen over the next 12 months. ANZ said in a recent note that the yellow metal’s price rally is continuing amid a weak U.S. dollar and falling U.S. Treasury yields. “As geopolitical risks continue to support safe-haven demand, China’s impressive rise in gold demand in the first quarter of 2024 largely drove the price rally,” ANZ strategists wrote. China is now the leading consumer demander for bullion after overtaking India in 2023 to become the world’s largest buyer of gold jewelry. Chinese consumers also led the way in gold purchases, buying 603 tonnes of gold jewellery last year, up 10% from 2022, according to data from the World Gold Council (WGC). The WGC expects Chinese jewellery demand to remain strong this year, even higher than in 2023. UBS raises gold forecast In a note last week, UBS strategists raised their gold forecast to $2,500 an ounce by the end of September and $2,600 by the end of the year. The bank’s bullish outlook is driven by strong Chinese demand, as well as weak U.S. data in April that has led to some repricing of expectations for a U.S. Federal Reserve rate cut. “We think gold could continue to make new highs,” UBS Precious Metals Strategist Joni Teves said on Monday.