Julius Baer Raises Gold Forecast to $4,500 Amid Central Bank Buying Spree

Bank sees gold rally supported by macro trends and institutional demand for up to five years

Gold Prices Surge Past $4,000

Swiss private bank Julius Baer has significantly raised its gold price forecasts, pointing to strong central bank demand and favourable macroeconomic conditions. The move follows a sharp rally in the precious metal, with spot gold (XAU/USD) prices surpassing $4,000 per ounce, marking a 50% increase since the start of the year.

This performance places gold on track for its best annual gain since 1979, driven by safe-haven inflows and increasing structural support from institutional investors.

New Gold and Silver Price Targets

Julius Baer has updated its price targets for gold as follows:

• Three-month target: $4,150/oz
• Twelve-month target: $4,500/oz

For silver, the bank lifted its price outlook to:

• Three-month target: $50/oz
• Twelve-month target: $54/oz

These upgrades come alongside the bank’s continued “constructive” outlook on the precious metals market.

Key Drivers Behind the Rally

According to Carsten Menke, Head of Next Generation Research at Julius Baer, the current surge in gold is supported by:

• A cooling U.S. economy, which reduces expectations for aggressive interest rate hikes.
• A weaker U.S. dollar, increasing gold’s appeal to foreign buyers.
• Increased safe-haven demand amid geopolitical tensions and market uncertainty.
• Ongoing central bank buying, especially by emerging market economies looking to diversify away from the dollar.

Menke explains:

“Assuming a target gold allocation of 20% to 25%, in line with the global average, central bank gold buying should continue for another three to five years.”

Could There Be a Correction?

While Julius Baer acknowledges the possibility of a short-term pullback due to recent sharp gains, the bank does not foresee a major correction. Any dip is expected to be brief, especially considering the broader macroeconomic support and institutional appetite for gold.

“We see a very limited likelihood of a major correction but believe that a temporary setback might occur due to the bullish market mood,” Menke said.

What This Means for Investors

The raised targets reinforce gold’s status as a safe-haven asset amid uncertainty in equity and bond markets. For investors:

• Precious metals ETFs and gold miners could continue to outperform if momentum holds.
• Central bank demand acts as a long-term floor under prices, supporting gold even during brief corrections.
• Silver, often viewed as a high-beta play on gold, also looks set for a strong year.

The bank’s forecast suggests that investors looking for diversification away from traditional assets such as stocks and bonds may find precious metals an attractive hedge, particularly if inflationary pressures or currency volatility return.

Final Outlook

With institutional and sovereign demand remaining strong, Julius Baer’s bullish forecast points to a sustained uptrend in gold prices through 2025 and beyond. Investors seeking portfolio protection, inflation hedging, or simply capitalising on momentum may find gold an increasingly viable asset class in the current macro environment.

Source: (Investing.com)