A Report from Goldman Sachs Predicts Gold Prices will Increase 6% in the Next 12 Months

Goldman Sachs predicts that gold prices will rise 6% in the next 12 months to around $2,175 per ounce, driven by central bank buying activity and increased retail demand in emerging markets.

While the short-term outlook for gold is uncertain due to investor and market uncertainty about the Federal Reserve’s interest rate policy, gold prices are expected to rise throughout the year due to several supporting factors.

As of February 26th, the global gold price was trading at $2,033 per ounce, a slight decrease compared to the previous week’s closing price. From the beginning of the year until now, the price of gold has decreased by about $30 per ounce.

According to analysts, gold prices are not expected to break out in the short term as the Federal Reserve has not clearly announced when they will start the interest rate reduction cycle. Furthermore, this trajectory may extend until mid-2024, rather than the expected timeframe of March 2024 as projected last year.

If the price of gold rises to $2,175 per ounce as predicted by Goldman Sachs, using the current exchange rate, the world gold price will be equivalent to about 65 million dong per tael. So how much will the domestic gold price increase?

Speaking to reporters from Bao Người Lao Động, gold expert Tran Duy Phuong analyzed that many international financial institutions have forecasted an increase in gold prices this year, not just Goldman Sachs. Some organizations even believe that gold prices will rise to $2,500 or $3,000 per ounce in the future.

“In the next 6 months, gold prices will increase, with the strongest increase occurring from the end of the third quarter to the beginning of the fourth quarter of 2024, as gold prices tend to go up at the end of each year. The main factors affecting gold prices are central banks cutting interest rates, especially the Federal Reserve, which is expected to implement this plan starting in the middle of this year.

When interest rates decrease, the value of the USD will decrease, government bond yields in the US will decrease, and gold prices will benefit. Previously, the price of gold dropped sharply when the Federal Reserve raised interest rates,” analyzed Mr. Phuong.

In recent days, when the world gold price dropped below $2,000 per ounce, there was a strong wave of bottom-fishing and gold buying in the market.

Mr. Nguyen The Hung, Deputy Chairman of the Vietnam Gold Business Association, believes that fundamental and technical analyses both indicate that gold prices in 2024 may exceed $2,100 per ounce. However, the specific increase in gold prices will depend on the forecasting methods used by analysts.

When world gold prices rise, domestic gold prices will also increase. However, the specific increase and the difference between SJC gold and world gold prices will depend on whether the State Bank’s market stabilization policies for gold change.

If the world gold price reaches $2,175 per ounce as forecasted, equivalent to about 65 million dong per tael, according to experts, the domestic gold price will also increase. Specifically, the price of SJC gold and various types of 24K gold jewelry will be above 66 million dong per tael, as SJC gold prices are always higher than the world price by about 1 million dong.

“In the case of SJC gold, if there are no stability measures for the gold market and no gold supply for the market from the State Bank, the price of SJC gold could increase to 85 million dong per tael. Conversely, if there are stabilization measures from the government, the price of SJC gold will decrease and the difference with the world price will be as low as 5-7 million dong,” Mr. Tran Duy Phuong expressed his opinion.