Geopolitical and structural factors are aligning to potentially drive the price of gold to $2,600 per ounce within a year, according to market veteran Juerg Kiener. The precious metal has been reaching record highs this year, with spot gold surpassing $2,300 and continuing to rise. Kiener’s forward curve analysis indicates that gold has a lot of pent-up demand which could lead to even higher prices if a short squeeze were to occur. He attributes this potential surge in price to factors such as an inventory collapse, changing international trade structures, and governments printing money excessively.
One of the key factors driving the bullish outlook for gold is geopolitics, with conflicts in Gaza and Ukraine, the upcoming U.S. election, and the possibility of recession in major economies contributing to uncertainty and increased demand for safe haven assets. In addition, the expectation of interest rate cuts by the U.S. Federal Reserve further supports the case for investing in gold, as lower borrowing costs make gold more appealing compared to fixed-income assets like bonds. Kiener also highlights the massive flow of precious metals leaving the West and a growing demand for gold in Asia and the BRIC countries.
The demand for gold in China has been increasing, with investors and households turning to the precious metal as the country’s property market remains unstable and stock markets experience volatility. The World Gold Council reported higher demand for gold in 2023 from Chinese consumers. Central banks around the world have also been boosting their gold reserves over the past year, which has helped support prices and further enhances the positive outlook for gold. These structural trends, combined with geopolitical uncertainties and monetary policy decisions, have created a favorable environment for gold to thrive in the near to medium-term.
Market fundamentals and technical factors are also aligning in support of higher gold prices, with Kiener’s forward curve analysis projecting a price of $2,600 per ounce in the near future. A potential short squeeze could drive prices even higher as traders who had short positions are forced to buy the asset to prevent further losses. Kiener emphasizes the risk to derivative structures in the gold market and the potential for a significant price increase if a short squeeze were to occur. With ongoing geopolitical tensions, uncertainty surrounding economic conditions, and shifting international trade dynamics, gold remains an attractive investment option for many investors seeking a safe haven asset.
In conclusion, the combination of geopolitical tensions, structural shifts, and economic uncertainties are driving gold prices higher and creating a positive outlook for the precious metal. Factors such as inventory collapses, increased demand from China, and central bank buying have contributed to the upward trend in gold prices. With the potential for a short squeeze and favorable market conditions supporting higher prices, gold could reach $2,600 per ounce in the near future. Investors are closely monitoring these developments and positioning themselves to take advantage of the potential opportunities presented by the rise in gold prices.
