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Gold prices settled at a record high on Friday for the 13th time this year, as various factors including rising geopolitical tensions, bets on US interest rate cuts and near-record buying by central banks have The metal’s rally continued despite strong U.S. job growth in March.
Gold’s safe-haven potential has more than offset a significantly stronger-than-expected U.S. labor market, fueling concerns that Federal Reserve interest rate cuts aren’t such a sure thing after all; Gold prices are closely linked to rates, and higher rates decrease the metal’s attractiveness.
The most active Comex gold contract (XAUUSD:CUR) for June delivery has closed +1.5% to $2,345.40/oz on Friday, after trading as high as $2,350 during the session, an all-time intraday record high.
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Some analysts warn that growing uncertainty over Fed rate cuts will prove a headwind for gold prices, including Commerzbank’s Thu Lan Nguyen, who doubts the Fed will launch a “pronounced easing cycle” and therefore expects to “See limited further upside potential for gold over the medium term.”
But David Rosenberg of Rosenberg Research predicts gold will rise to $3,000 or even higher, and not just driven by the Fed.
“With an easing cycle on the horizon, weak and seemingly weakening global growth, and inflation in its final stage of decline, we believe the tailwinds pushing gold to new highs are about to get much stronger “, writes Rosenberg.
Western investors have yet to become bullish on gold, and large money managers are underinvested in the commodities sector in general, Rosenberg notes, also pointing to tight supply conditions and gold’s safe-haven reputation as positive factors.