Sou Hu Cai Jing·2025-07-01 17:51Core Viewpoint - The potential for gold prices to reach $3,500 per ounce by the end of 2025 is supported by various market dynamics, institutional forecasts, and influencing factors [1][17]. Group 1: Factors Supporting Price Increase - Major investment banks, including Goldman Sachs and UBS, have raised their forecasts multiple times, predicting gold prices could reach $3,700 per ounce by the end of 2025, with a possibility of $4,000 by mid-2026 due to geopolitical risks, weakening dollar credit, and ongoing central bank purchases [1]. - The long-term upward cycle for gold remains intact, with significant support from central bank purchases, as global central banks have been net buyers for 16 consecutive years, adding 244 tons in Q1 2025 [2][5]. - Expectations of a Federal Reserve interest rate cut could further weaken the dollar, which has already fallen to its lowest level since March 2022, potentially boosting gold prices [3]. Group 2: Geopolitical and Structural Demand - Ongoing geopolitical risks, such as the fragility of Middle East ceasefire agreements and fluctuating U.S.-China tariff negotiations, may reignite safe-haven demand for gold [4]. - The structural demand for gold is reinforced by the fact that 95% of central banks plan to continue increasing their gold reserves over the next 12 months [5]. Group 3: Risks to Price Increase - Technical analysis indicates that if gold prices fall below $3,165 per ounce, a technical correction of 10-15% could occur, potentially bringing prices down to the $2,500-$2,700 range [6]. - Current gold prices are detached from actual production costs, indicating a risk of valuation correction due to high price levels [7]. - If strong non-farm payroll data or inflation rebounds occur, the Fed may delay interest rate cuts, which could suppress gold prices [8]. Group 4: Institutional Divergence - There is a divergence among institutions regarding gold price forecasts, with Goldman Sachs predicting $3,700, UBS over $3,500, while Citigroup warns of a potential drop to the $2,500-$2,700 range [11]. Group 5: Investor Strategy Recommendations - Investors are advised to maintain rationality amid short-term volatility and avoid chasing price movements, as gold prices are highly sensitive to policy changes [12]. - A recommended allocation for gold in household financial assets is between 5-10%, with a strategy of dollar-cost averaging into gold ETFs to mitigate timing risks [12]. - Key policy anchors to monitor include the Federal Reserve's interest rate decisions and the political landscape surrounding U.S. elections [13].