Banking Giants Bullish As Gold Prices Soar To Record Highs

Gold prices shattered records again on Tuesday, climbing to an unprecedented $3,145.38 per ounce, as mounting concerns over US President Donald Trump's newly proposed reciprocal tariffs ignited a surge in safe-haven demand.

Spot gold was up 0.3% at $3,132.53 per ounce as of 10:08am ET (1408 GMT), after hitting an all-time high of $3,148.88 earlier in the day, Reuters reported. US gold futures were 0.4% higher at $3,164.20.

The rally, fulled by fears of escalating inflation and a potential slowdown in global economic growth, has drawn sharp attention from Wall Street's biggest players, with Morgan Stanley, Citigroup, and Goldman Sachs issuing increasingly bullish forecasts for the yellow metal through 2025 and beyond.

Analysts point to two primary forces propelling gold's relentless climb.

Amy Gower, Morgan Stanley's metals and mining commodity strategist, told Bloomberg on Monday that the rally - years in the making - stems from a sustained uptick in physical demand, particularly from central banks, coupled with fresh inflows from investors.“Central banks doubled their gold purchases compared to the previous decade starting in 2022, and that trend has held,” Gower noted.“More recently, we're seeing investor demand for physical bars, coins, and ETFs pick up - new money flowing into gold with room to grow.”

Gower highlighted a shifting macroeconomic landscape as a key tailwind.“High interest rates have been a headwind for gold, but as rates peak and trend lower, gold becomes more competitive against equities and bonds,” she explained.

Morgan Stanley's bull case sees gold hitting $3,300 to $3,400 per ounce this year, though Gower cautioned that stabilisation may be needed to sustain the rally.“Jewellery demand, twice the size of central bank buying, could soften at these levels as budgets tighten, and we're seeing signs of pause from players like the Reserve Bank of India,” she said.“Recycling supply could also rise, tempering gains unless ETF inflows hold strong.”

Citigroup's Max Layton, global head of commodities Research, echoed the bullish sentiment in a weekend CNBC interview, pegging gold's base case at $3,200 per ounce within months, with a potential climb to $3,500 if US growth falters more than expected.

Layton zeroed in on Trump's tariff rhetoric as a game-changer.“The administration's talk of steep tariffs - to start from April 2 - could disrupt global and US growth over the next three to six months, even if only partially implemented,” he said.“That's a recipe for precautionary savings, boosting ETF demand and household gold purchases, which could drive prices higher into mid-2025.”

Layton tied the trend to a broader slowdown in US economic momentum, a pattern that historically lifts gold as a hedge.“We've seen savings rates and ETF inflows rise together when growth concerns deepen,” he added.“This could be the next leg up.”

Goldman Sachs, meanwhile, has raised its 2025 forecast to $3,300 per ounce from $3,100, but its analysts also floated a dramatic outlier: under severe market stress, gold could soar past $4,200 by late 2025, potentially exceeding $4,500 in 2026. While deemed unlikely, this scenario underscores the bank's confidence in gold's resilience amid uncertainty.

After briefly dipping to test support at $3,100 following the North American market open, spot gold rebounded to near its session highs, signalling robust momentum. The convergence of physical demand, investor inflows, and geopolitical risks - amplified by Trump's tariff threats - has analysts convinced that gold's bull run is far from over. Precious metals analysts said rapid price surges could trigger demand destruction in discretionary sectors like jewellery, while central bank buying may cool if prices stretch too far, too fast.

For now, banking giants see gold's trajectory as upward, with the interplay of macro conditions and policy shocks likely to dictate its ceiling.

“As long as physical demand holds and macro tailwinds align, gold hasn't peaked yet,” experts said.

Investors, it seems, agree - pushing the metal into uncharted territory with no clear limit in sight.

MENAFN03042025000049011007ID1109385621