Welcome to Thoughts on the Market, I'm Amy Gower, Morgan Stanley's Metals and Mining Commodity Strategist.
Today I'm going to talk about the steady rise we've had in gold prices in recent months and whether or not this rally can continue.
It's Tuesday, April 15th at 2pm in London.
So gold breached $3,000 an ounce for the first time ever on the 17th of March this year and has continued to rise
since then,
but we would argue it still has further room to run.
First of all, let's look back at how we got here.
So gold already rallied 25% in 2024,
which was driven largely by strong central bank demand as well as the start of the US-fed rate-cutting cycle and strong demand for bars and coins as geopolitical risk remained elevated.
And now rising tariff uncertainty also contributing.
This comes in two ways.
First, demand for gold as a safe haven asset against this current macro uncertainty.
And second, as an inflation hedge.
Gold has historically been viewed by investors as a hedge against the impact of inflation,
so with the US tariffs raising inflation risks, gold is seeing additional demand here too.
But of course the question is, can this gold rally keep going?
We think the answer is yes, but would caveat that in big market moves, like the ones we've seen in recent weeks,
gold can also initially fall alongside other asset classes as it's often used to provide liquidity.
But this is often short-lived and already gold has been rebounding.
We would expect this to continue with price of gold to rise further to around $3,500 an ounce by the third quarter of this year.