Gold Prices Supported by Solid Demand
Gold prices are expected to continue to receive strong support from institutional demand, including purchases from central banks. The UBS Global Wealth Management Chief Investment Officer believes that the weakening of gold in the past two weeks is likely temporary.
According to UBS, the previous pressure on gold arose due to rising energy prices, which also supported the US dollar. When the dollar strengthens, gold is typically more expensive for holders of other currencies, thus curbing short-term demand.
However, demand from large investors is still considered solid. UBS noted strong interest from sovereign wealth funds in the Middle East, indicating that institutional demand for gold is expanding, not just from central banks.
These official sector purchases are seen as a structural support for gold prices. This means that as long as central banks and large institutions continue to actively accumulate gold, there is room for the precious metal to strengthen.
UBS estimates that gold prices could move towards US$5,900 per ounce by the end of the year. Meanwhile, the spot price of gold rose 3.1% to US$4,695.59 per ounce, reflecting continued strong market interest in safe-haven assets.
Source: Newsmaker.id
