Gold extended gains following the collapse of Silicon Valley Bank. The shifting expectations of US federal fund rates (FFR) are likely to see strong support for haven assets such as Gold, economists at ANZ Bank report.
Strong demand for safe haven assets
“The precious metals allure as a safe haven asset saw strong demand from investors. This was aided by a sharp reassessment of the direction of Fed policy. The market’s expectations of smaller rate hikes saw the 10y yield on Treasuries fall to a six-week low, while the USD erased its gains for the year.”
“The short outlook for Gold looks strong. The precious metal has jumped above its 50-Day Moving Average, signalling a change in momentum. With investor allocation relatively low, we expect this to continue.”
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The global market is roiling with a plethora of shifts and market changes that have investors tracking the price of gold. The gold price forecast is of keen interest to many investors, as gold is seen by many as a haven in times of market volatility. ANZ bank recently released a report that stated their outlook for the price of gold, or XAU/USD, and their outlook is surprisingly strong.
ANZ believes that the price of XAU/USD looks set to remain high in the near future, due largely to increasing geopolitical concerns and economic volatility. This startling prediction is partially supported by the weakened US dollar, which has left investors more likely to turn to gold as a hedge against risk and volatility. Low interest rates around the world also add fuel to the fire, as it helps to drive investors to seek safe haven assets such as gold.
The report also suggests that large global central banks are likely to continue down the path of increasing their gold reserves in order to provide stability during uncertain economic times. This has already been seen in Japan, China, and several other central banks who have been buying gold to provide safety in their portfolios.
Overall, ANZ remains confident in their gold price forecast and believes that XAU/USD is on a strong footing for the foreseeable future. With global geopolitical tensions and declining confidence in the global economy, ANZ believes that gold is likely to remain in demand for some time yet. Investors interested in adding gold to their portfolios should take this strong outlook from ANZ bank into account when making their decisions.