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Gold prices settled at a record high for a 13th time this year on Friday, as various factors including surging geopolitical tensions, U.S. interest rate cut bets, and near-record buying by central banks maintained the metal’s rally despite strong U.S. job growth in March.
The safe haven potential of gold has more than made up for a significantly stronger than expected U.S. job market, which feeds into concerns that Federal Reserve interest rate cuts are not such a sure thing after all; gold prices are closely linked to rates, and higher rates diminish the metal’s appeal.
The most-active Comex contract gold (XAUUSD:CUR) for June delivery closed +1.5% at $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 caution that increasing 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 thus expects to “see limited further upside potential for gold in the medium term.”
But David Rosenberg of Rosenberg Research predicts gold will surge to $3,000 or even higher, and not just driven by the Fed.
“With an easing cycle on the horizon, global growth weak and looking weaker, and inflation on its last leg of decline, we’re of the view that the tailwinds blowing gold to new highs are about to get a lot stronger,” Rosenberg writes.
Western investors have yet to turn bullish on gold, and big money managers are underinvested in the commodity sector overall, Rosenberg notes, also pointing to tight supply conditions and gold’s safe haven reputation as positives.