Investing.com -- Gold prices hovered near record highs on Thursday, supported by safe-haven demand amid concerns over tariffs and expectations of a Federal Reserve rate cut following fresh U.S. inflation data.
Spot gold rose 1.1% to $2,967 per ounce by 14:54 GMT, marking a new record high. The metal has been buoyed by ongoing market uncertainty linked to U.S. trade policies.
President Donald Trump’s shifting stance on tariffs—raising duties on Chinese goods while adjusting trade measures on Canada and Mexico—has unsettled global markets. Retaliatory moves from China and Canada have added to investor caution, further supporting gold.
Meanwhile, economic data on Wednesday showed U.S. consumer prices cooling more than expected, reinforcing speculation that the Fed could ease monetary policy.
The central bank, which cut interest rates by 100 basis points last year, has since paused further adjustments. Lower rates tend to favor gold, as they reduce the opportunity cost of holding the non-yielding asset.
Traders now look to the U.S. Producer Price Index (PPI) data, due at 1230 GMT, for more clarity on the Fed’s path. A weaker-than-expected reading could strengthen bets on a rate cut, providing additional support for gold. On the other hand, a stronger report might limit gains.
Strategists lift forecasts for gold prices on bullish outlook
Clearly, the rise in gold prices so far this year has been impressive. Still, market strategists believe this outperformance could continue, leading to upward revisions in their gold prices forecasts.
Macquarie strategists have raised their gold price outlook, expecting the metal to peak at a quarterly average of $3,150 per ounce in the third quarter of 2025, with a single-point high of $3,500. This level would closely align with the inflation-adjusted record of $3,505 per ounce from January 1980, following the second oil shock.
They also increased their long-term real price outlook to $2,250 from $2,000, anticipating a prolonged period of elevated gold prices.
“We view gold’s price strength to date, and our expectation for it to continue, as primarily being driven by investors’, and official institutions’, greater willingness to pay for its lack of credit or counterparty risk,” strategists said.
“This is reflected in it already reaching nominal all-time price highs, even as the opportunity cost of holding gold (as a zero yield asset) has been relatively high.”
Gold has already outpaced Macquarie’s expectations this year, reaching its second-quarter forecast in the first quarter.
The firm attributes this to geopolitical uncertainty, driven in part by Trump’s swift tariff announcements, which have fueled inflation expectations and pressured real interest rates lower, despite intermittent U.S. dollar strength and shifting Fed policy expectations.
Given fiscal pressures in the U.S. and other advanced economies, they see gold remaining historically high. Moreover, they note that if the Trump administration were to challenge the Federal Reserve’s independence—though not their base case—it would “likely turbocharge gold’s price performance.”
Separately, RBC Capital Markets strategists have also lifted their gold prices forecasts, incorporating insights from their machine learning model.
They now project gold at $2,844 per ounce in 2025, a slight 1% increase from their previous estimate, and at $3,111 per ounce in 2026, up 8%.
"We view tariff-related risks as priced in, but we still see a positive skew for price outcomes by year-end,” RBC noted.
The investment bank’s base case does not factor in a recession or a significant rate-cutting cycle in 2025, but if either materializes, they suggest gold could exceed $3,100 per ounce by the end of next year.