Gold’s Glitter Dims, But Analysts Say the Shine Isn’t Gone Yet

Core Viewpoint - Gold is experiencing a temporary dip, with analysts believing it is a short-term correction rather than the start of a prolonged downturn [1][2] Price Performance - Gold surged nearly 75% year-to-date in 2025, reaching an all-time high of US$4,336 per ounce on October 30, before slipping about 6% to around US$4,062 [1] Factors Behind the Pullback - The strengthening US dollar is a major factor, making gold more expensive for international buyers and dampening demand [2] - Goldman Sachs expects gold to climb to US$4,900 by the end of 2026, representing a gain of roughly 21% from current levels [2] Investor Sentiment - Analyst Lina Thomas sees potential for further upside if private investors diversify into gold alongside traditional portfolios [3] - UBS strategists forecast gold could reach US$5,000 by 2026 or 2027, reinforcing the view that the current pullback is a buying opportunity [3] Interest Rates and Demand - The outlook for US interest rates has shifted, with the likelihood of a rate cut in December falling below 50%, making Treasuries more attractive compared to gold [4] - Goldman remains bullish due to strong demand from central banks and private investors [4] Central Bank Activity - Central banks have been accumulating gold since 2022 to reduce reliance on dollar-denominated assets, a trend that accelerated after US sanctions on Russia [5] - Buying activity from central banks even increased in September [5] ETF Investments - Over US$41 billion has flowed into gold-backed ETFs like SPDR Gold Shares (GLD) this year [5] - Despite modest outflows of about US$1.2 billion in recent weeks, Goldman expects ETF investors and ultra-high-net-worth individuals to continue accumulating physical gold [6]