Gold Rush Picks Up Speed

Thoughts on the Market vor 1 Jahr

0:00

4:07

As gold prices reach new all-time highs, Metals & Mining
Commodity Strategist Amy Gower discusses whether the rally is
sustainable.

Read more insights from Morgan Stanley.

---- Transcript -----

Welcome to Thoughts on the Market. I’m Amy Gower, Morgan
Stanley’s Metals & Mining Commodity Strategist. Today I’m
going to talk about the steady rise we’ve had in gold prices in
recent months and whether or not this rally can continue.

It’s Tuesday, April 15th, at 2pm in London.

So gold breached $3000/oz for the first time ever on 17th of
March this year, and has continued to rise since then; but we
would argue it still has room to run.

First of all, let’s look back at how we got here. So, gold
already rallied 25 percent in 2024, which was driven largely by
strong central bank demand as well as the start of the US Fed
rate cutting cycle, and strong demand for bars and coins as
geopolitical risk remained elevated.

And arguably, these trends have continued in 2025, with gold up
another 22 percent, and now rising tariff uncertainty also
contributing. This comes in two ways – first, demand for gold as
a safe haven asset against this current macro uncertainty. And
second as an inflation hedge. Gold has historically been viewed
by investors as a hedge against the impact of inflation. So, with
the U.S. tariffs raising inflation risks, gold is seeing
additional demand here too.

But, of course, the question is: can this gold rally keep going?
We think the answer is yes, but would caveat that in big market
moves -- like the ones we have seen in recent weeks -- gold can
also initially fall alongside other asset classes, as it is often
used to provide liquidity. But this is often short-lived and
already gold has been rebounding. We would expect this to
continue with the price of gold to rise further to around
$3500/oz by the third quarter of this year.

There are three key drivers behind this projection:

First, we see still strong physical demand for gold, both from
central banks and from the return of exchange-traded funds or
ETFs. Central banks saw what looks like a structural shift in
their gold purchases in 2022, which has continued now for three
consecutive years. And ETF inflows are returning after four years
of outflows, adding a significant amount year-to-date, but still
well below their 2020 highs, suggesting there’s arguably much
more room to go here.

Second, macro drivers are also contributing to this gold price
outlook. A falling U.S. dollar is usually a tailwind for
commodities in general, as it makes them cheaper for non-dollar
holders; while a stagflation scenario, where growth expectations
are skewed down and inflation risks are skewed up, would also be
a set-up where gold would perform well.

And third, continued demand for gold as a safe-haven asset amid
rising inflation and growth risks is also likely to keep that bar
and coin segment well supported.

And what would be the bullish risks to this gold outlook? Well,
as prices rise, you tend to start ask questions about demand
destruction. And this is no different for gold, particularly in
the jewelry segment where consumers would go with usually a
budget in mind, rather than a quantity of gold. And so demand can
be quite price sensitive. Annual jewelry demand is roughly twice
the size of that central bank buying and we already saw this fall
around 11 percent year-on-year in 2024. So, we would expect a bit
of weakness here. But offset by the other factors that I
mentioned.

So, all in all, a combination of physical buying, macro factors
and uncertainty should be driving safe haven demand for gold,
keeping prices on a rising trajectory from here.

Thanks for listening. If you enjoy the show, please leave us a
review wherever you listen and share Thoughts on the Market with
a friend or colleague today.