In the current cycle of rising metal prices, gold is approaching and may even have arrived as peace talks begin in Ukraine.
A glimpse of the change from rampant one-way trading can be seen in modest corrections over the past week, with a price drop of $40 per ounce since hitting an all-time high of $2939 per ounce in the London bar market.
Pure 1,000 grams of gold bars produced by South Korea's LS-Nikko are stacked in Seoul. Photo by Kim Jae-Hwan … [+]
AFP via Getty Images
This record can be beaten because of momentum trading and delayed arrivals at the once-unthinkable $3000/oz gold party.
But this is a shift in the trend since the Russian invasion of Ukraine, as the fundamental principle of destruction of demand and increased supply becomes prices.
Investment bank Morgan Stanley expects gold to drop to $2,700 per ounce by the end of this year, possibly as low as $2,400 per ounce 12 months ago.
Central bank purchases will remain the main driver of the gold market, twice as fast as before the war in Ukraine began, but no longer showing an upward trend.
“In our opinion, tariff uncertainty may make prices higher,” the bank said.
“However, further disruption of recycling and potential profits and supply responses suggest that prices may end than today’s 2025, and we forecast to reach $2,700 per ounce by the fourth quarter.”
$2400/oz Peace Agreement
The low price calculated by Morgan Stanley is $2,400 per ounce, based on the possible decline in central bank purchases, “if there is a potential Russian/Ukrainian peace agreement, it may occur.”
The bank said the rise in gold prices since the beginning of the year has been driven by stocks replenished in the U.S. COME X market and has led to a decline in other markets.
“This impact may be gradually fading as COMEX and London prices shrink again, and the United States has previously been stable at a close approach to U.S. stocks,” Morgan Stanley said in a research note.
Golden corn factory in the bank
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The answer to the title’s question about whether gold is unstoppable is perhaps the next move by the central bank, which has more purchasing power than any other participant in the gold market.
For gold enthusiasts, Morgan Stanley issues a striking warning in his analysis of the “drive” including 10-year tips for analyzing (inflation-protected fiscal bonds), DXY (USD index), central bank reserves , ETF Holdings, ETF Holdings, ETF Holdings, ETF Holdings, U.S. consumer price inflation, global risk index and commodity futures net positioning.
After analyzing these factors and their impact on the price of Gold Morgan, the price was only $2,000 per ounce, as the data was trained in the past five years.
Morgan Stanley said the “latest” gold drivers are central banks' purchases since 2022, although not necessarily showing an increasing trajectory.
“The latest data released by the World Gold Council last week showed that the fourth quarter of global central banks purchased 333 tons (a 54% year-on-year increase) and 2024 was the third consecutive year of purchases of more than 1,000 tons in 2024. ,, that's twice the average rate seen before the Russian/Ukrainian conflict began. “The bank said.
Central banks may buy less gold
“Our basic case assumes that the central bank purchases at a slightly moderate rate in 2025.
“However, we continue to focus on downside risks in this regard from high prices or potential Russian/Ukrainian peace agreements.”
Just as a war in Europe triggered the gold boom led by the central bank, the outbreak of peace in Europe also triggered the gold slide.
