In the first quarter of this year, the gold market performed strongly, with New York gold futures prices rising by 19.63% over three months, repeatedly breaking historical highs and attracting global investors' attention. Wall Street investors have significantly raised their expectations for gold's outlook, with the most optimistic prediction suggesting that gold prices may exceed $3,500 per ounce in the third quarter, setting a new historical high.
However, some experts believe that the possibility of gold prices surpassing $3,500 in the short term is low, maintaining their target price at $3,200. Nevertheless, gold prices have already reached $3,170 this week, just a step away from this target, further increasing the market's focus on gold.
Currently, the main factors driving the rise in gold prices include the reversal of gold ETF fund inflows and continued gold purchases by central banks worldwide. Moreover, retail market demand for gold products also remains strong, contributing to the rise in the gold market. Market demand for gold remains robust, especially amidst increased uncertainty, where gold is seen as an important tool for hedging risks.
In the first quarter, gold ETF inflows increased significantly, with UBS estimating an inflow of between 130 and 150 tons, compared to a 114-ton outflow during the same period in 2024. Standard Chartered Bank data shows that investors have injected over $19.2 billion into gold ETFs in the first quarter, marking the largest inflow since the pandemic.
Analysis suggests that the recovery of gold ETFs reflects the market's continued interest in gold, especially amidst global economic and trade uncertainty, potential stagflation, recession risks, and geopolitical tensions, further recognizing gold's safe-haven properties.
Despite the significant rise in gold prices, some investors find it more challenging to increase gold allocations at this time. However, in the long run, gold is still considered an important component of asset allocation, with recommendations for investors to allocate a certain proportion of funds into gold within a balanced investment portfolio to achieve optimal diversification.
Overall, the rise in gold prices is not merely the result of panic buying but rather a reflection of investors' acceptance and adjustment of a mentality towards prolonged uncertainty. While gold prices may face short-term corrections, in the long term, gold remains an important asset for addressing extreme market risks.
