Against the backdrop of geopolitical conflicts and expectations of interest rate cuts, gold prices have repeatedly broken historical highs this year, reaching $2,760/ounce, $2,770/ounce, $2,780/ounce... forcing major Wall Street firms to continuously raise their target prices amid &#34;slaps in the face.&#34;
Currently, the market's focus is undoubtedly on where the endpoint of this round of gold price increases lies. According to a summary by Wall Street Journal, several major Wall Street firms, including Citigroup, Goldman Sachs, UBS, and Bank of America, have basically reached a consensus on the future trend of gold prices—projecting a rise to $3,000/ounce next year, an increase of nearly 9% from the current gold price. Morgan Stanley is even more aggressive, predicting that gold prices will reach $3,100/ounce in the first quarter of next year.
Safe-haven demand is one of the main factors driving the rise in gold prices. A previous report by Goldman Sachs pointed out that since the outbreak of the Russia-Ukraine conflict, global central bank demand for gold has quadrupled. Bank of America noted that amid uncertainty surrounding the U.S. elections and a global central bank rate-cutting cycle, gold is the best hedging asset.
From a 主体 perspective, Morgan Stanley believes that the influence of gold ETFs, central banks, and individual investors in the futures market on gold prices is continuously increasing. Citigroup's latest report also pointed out that the overall gold investment demand, including public and private investments, remains at historically high levels, exerting upward pressure on gold prices; in addition, with global jewelry demand showing resilience and financial demand increasing, this has effectively supported gold prices over the past 3-4 months.
As of the time of publication, spot gold is quoted at $2,752.6/ounce.
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<h2>Citigroup: High Investment Demand Drives Gold Prices Up</h2>
On October 31, Citigroup analysts Maximilian J Layton and his team released a report stating that the upward trend of spot gold this year cannot be explained by traditional gold pricing frameworks. Citigroup has adopted a new investment-driven fundamental flow framework to explain gold pricing.
Using the new fundamental framework, Citigroup found that even though the proportion of investment demand relative to mineral supply has decreased quarter-on-quarter, the gold price continues to rise partly because the overall investment level remains high.
When the investment ratio exceeds 70% of mineral supply, gold prices tend to rise to reduce jewelry demand and encourage the supply of minerals and scrap.
In the third quarter of 2024, the investment ratio was 78%, down from 92% in the second quarter. Citigroup predicts that the proportion of investment demand relative to mineral supply will rebound to 90%, which could support spot gold prices to rise by 3-5% each quarter in the coming quarters.
In addition to investment demand, jewelry demand is also supporting the rise in gold prices.
Citigroup stated that in the context of high investment demand and elevated prices, jewelry demand, excluding scrap supply, has shown considerable resilience—seasonally rebounding in the third quarter from the extremely low levels of the second quarter. Moreover, the jewelry demand in the third quarter is two to four times that of 2011 and 2012 when gold prices were at similar real levels
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Citigroup also believes that the last short-term factor supporting the rise in gold prices over the past 3-4 months has been investment positions. Non-commercial positions in gold on the New York Mercantile Exchange (Comex) have increased by 183 tons to 918 tons over the past four months, accounting for 4% of annual demand.
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<h2>Goldman Sachs: Central Bank Demand Expectations Have Quadrupled</h2>
Goldman Sachs stated that central banks in emerging markets have increased their purchases of gold. From a structural perspective, central bank demand is higher than that of investors and speculators (leading to a 9% increase by December 2025), coupled with the gradual increase in gold ETF holdings after the Federal Reserve's interest rate cuts (leading to a 7% increase), offsetting the drag from Goldman Sachs' assumption of a gradual normalization of positions (leading to a 6% decrease).
Since the Russia-Ukraine conflict, Goldman Sachs has quadrupled its expectations for global central bank demand for gold.
According to Goldman Sachs' new model, for every additional 100 tons of gold demand, the price of gold is expected to rise by 1.5%-2%.
<h2>Morgan Stanley: The Influence of ETF Holdings, Central Bank Purchases, and Investor Positions in the Futures Market on Gold Prices Has Increased</h2>
On October 23, due to the breakdown of the old relationship between gold prices and the dollar and oil prices, Morgan Stanley developed a new regression model to measure changes in gold prices. The new model incorporates multiple parameters such as ETF liquidity, central bank reserves, inflation index (CPI), dollar index (DXY), global risk index, and net futures positions.
Morgan Stanley stated that over the past five years, the influence of ETF holdings, central bank purchases, and investor positions in the futures market on gold prices has increased. Other high-frequency data that cannot capture factors such as demand for gold bars and coins, over-the-counter trading, mining supply, and recycling are also affecting gold prices.
Recently, despite rising interest rates, gold prices have continued to rise, which is related to increased central bank purchases and strong demand for gold bars and coins, while rising mining costs also provide support for prices.
<h2>Bank of America: Gold is the Best Hedge Asset</h2>
As several major central banks around the world enter a rate-cutting cycle, market expectations for further rate cuts have heated up, driving up gold prices—gold does not generate any interest, so its price typically benefits from falling interest rates. Bank of America believes that gold is the best hedge asset
Bank of America Chief Strategist Michael Hartnett pointed out in a previous report:
<blockquote>
The gold bull market is driven by policy and inflation. The 2020s will be a decade of fiscal excess in the U.S. and globally, as well as a decade of technology, trade tariffs, and protectionism.
The Federal Reserve is determined to cut real interest rates in the coming quarters, and investors only need to hedge against the threats of inflation and dollar depreciation, gold will far exceed $3,000/ounce.
</blockquote>
In addition, the uncertainty of the U.S. election also makes gold more attractive

Bank of America believes that gold is the best hedging asset. Goldman Sachs pointed out that since the outbreak of the Russia-Ukraine conflict, global central bank demand for gold has quadrupled. Morgan Stanley believes that the influence of gold ETFs, central banks, and individual investors on futures market positions is continuously increasing the impact on gold prices. Citigroup noted that the overall gold investment demand, including public and private investments, remains at historically high levels, exerting upward pressure on gold prices

- Gold prices have reached historic highs this year, driven by geopolitical tensions and expectations of interest rate cuts, with forecasts suggesting prices could rise to $3,000 per ounce in 2024.  
- Major banks, including Citigroup and Goldman Sachs, attribute this surge to increased demand from central banks and investors, particularly in light of the ongoing Russia-Ukraine conflict.  
- Investment demand remains robust, with gold ETFs and individual investors significantly influencing market dynamics, while jewelry demand has also shown resilience, supporting higher prices.

Wall Street has reached a consensus: gold is set to surpass $3,000!