Core Viewpoint - Morgan Stanley has raised its gold price forecast, expecting spot gold to exceed $4,000 per ounce in Q1 2026, driven by a forthcoming Federal Reserve rate cut cycle and strong investor demand [1][4][7]. Group 1: Price Predictions - The report predicts an average gold price of $3,800 per ounce by Q4 2025 and a breakthrough of $4,000 per ounce in Q1 2026, which is a quarter earlier than previous estimates [7]. - Historical data supports this prediction, showing that gold prices typically rise significantly during Federal Reserve rate cut cycles [7]. Group 2: Investor Demand Dynamics - Investor demand has overtaken central bank purchases as the primary catalyst for rising gold prices, with significant inflows into gold ETFs observed recently [1][4]. - In the two weeks leading up to September 5, 2025, global gold ETF holdings increased by nearly 72 tons, valued at approximately $8 billion [4]. Group 3: Economic Indicators - The report indicates that signs of weakness in the labor market outweigh inflation concerns, leading the Federal Reserve to maintain a dovish stance, which is favorable for gold [6]. - A decline in nominal yields translates to lower real yields, positively impacting gold investment demand, particularly from Western ETFs [6]. Group 4: Tail Risk Analysis - A potential risk scenario suggests that if concerns about the Federal Reserve's independence escalate, it could lead to a significant shift of funds from U.S. Treasuries to gold, potentially pushing gold prices above $5,000 per ounce within two quarters [9]. - The analysis indicates that even a relatively small shift of funds from the $29 trillion U.S. Treasury market could result in substantial price movements for gold [11]. Group 5: Market Conditions - The total value of gold held by private investors and official entities is approximately $9.4 trillion, compared to the $29 trillion U.S. Treasury market, indicating a significant market imbalance [11]. - The report highlights that a quarterly increase of $10 billion in gold demand could lead to a 3% rise in gold prices, showcasing the high price elasticity of gold [11].

Core Viewpoint - The euro is expected to rise above 1.20 against the dollar, but this may not pose significant issues for the European Central Bank (ECB) [1] Group 1: Euro and ECB Outlook - Analysts from Deutsche Bank predict the EUR/USD exchange rate will increase to 1.22 by year-end, up from a previous forecast of 1.20 [1] - The ECB's Vice President, Luis de Guindos, indicated that a stronger euro could be challenging, yet the ECB may tolerate further euro appreciation due to improved growth prospects [1] - The expectation of further interest rate cuts by the Federal Reserve and concerns over its independence are contributing factors to the euro's anticipated strength [1]