Gold and macro environment, page-1134

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And China buying gold, hand over fist, whilst  baring its’ teeth ….




https://www.afr. com/markets/commodities/why-it-s-not-too-late-to-jump-on-gold-s-bull-run-20250421-p5lt3s

Gold still offers ‘attractive entry point’ for investors
Nicola BlackburnMarkets reporter
Apr 21, 2025 – 3.01pm



Wall Street brokers are urging clients to buy gold despite prices already surging nearly 30 per cent this year as analysts scramble to adjust forecasts to keep up with the precious metal’s dizzying rally.
Goldman Sachs declared late last week that gold still offered an “attractive entry point” for investors, forecasting prices could hit $US4000 an ounce by the middle of next year. That’s 18 per cent above the precious metal’s current price, which hit another all-time high above $US3384 an ounce on Monday.

Banks have become progressively more positive about gold’s prospects. Jason South

Gold’s latest surge has been fuelled by US President Donald Trump’s criticism of the Federal Reserve and reports he is contemplating firing chairman Jerome Powell – which would dramatically challenge the central bank’s independence.
That has accelerated an exodus from US safe-haven assets such as the greenback and Treasuries as investors lose faith in the stability of the world’s largest economy and turn to gold, sparking another round of price upgrades by institutions around the world.
The US dollar index, which measures the greenback against a basket of currencies, hit a three-year low of 98.2 on Monday.
We view the [gold price] rally as structurally supported and less exposed to sharp near-term liquidation risk,” wrote Goldman analyst Lina Thomas. “Thus, we see current levels as a tactically attractive entry point.”

Higher forecasts

Goldman, which is tipping gold prices to hit $US3700 by the end of the year, joined ANZ, Saxo Bank, UBS, Citi and a slew of other major banks that have revised forecasts higher in recent weeks.
Spot prices surged as much as 1.7 per cent to touch a record $US3385.36 an ounce on Monday as fresh concerns about the global economy intensified a rush to safety across financial markets.
The International Monetary Fund is set to lower its outlook for growth on Tuesday.

Holdings in bullion-backed exchange-traded funds have risen for the past 12 weeks, the longest run since 2022, according to Bloomberg.
Central banks have also been adding the metal to their reserves as they diversify away from the US dollar.

Instos buying

But analysts believe large Chinese investors will be a crucial driver behind gold’s next leg higher in the coming months, with Goldman noting that flows from Asia had driven much of gold’s rally since early April.
Chinese insurance companies have stepped up gold buying after the government permitted 10 firms to allocate up to 1 per cent of their total assets to the precious metal as part of a pilot program.
Citi estimates the 10 firms alone will contribute 255 tonnes per year to total gold demand if they use the full 1 per cent quota – roughly 6 per cent to 7 per cent of supply from mines.

“The prospects of further expansion in insurance gold buying imply further upside potential in China gold demand beyond the current test phase of the plan,” said Citi analyst Kenny Hu, who lifted his price target on gold to $US3500 an ounce.
Chinese banks are expected to be another contributor. The People’s Bank of China has hiked import quotas for some commercial banks to allow them to meet higher demand from institutional and retail investors for the precious metal.
“We expect China gold import to rebound strongly over the coming months on the fresh import quota,” Hu added.