The gold price is well down on the highs it hit earlier in the year, but according to the analysts at RBC Capital Markets, the trend from here will be up.
RBC has issued a new research report on the yellow metal and says they remain bullish on its outlook.
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Gold in focus as uncertainty reigns supreme
Gold tends to benefit from uncertainty, and with the war in the Middle East dragging on, the war in Ukraine, and US President Donald Trump's ongoing trade wars, there's plenty of uncertainty around.
RBC said investors are coming back into the market in a new wave of the "debasement" trade, which refers to a flight to hard assets.
The broker said:
Recent months have seen investors come back in size, which should drive north of 200 tons of inflows this year. Central bank flows in particular, after a pause earlier this year, are back too. We think their reasoning and volume will remain consistent for now, leading to over 700 tons of inflows this year and next.
The broker said President Trump's popularity, or lack thereof, could also be key.
As they said:
While the macro drivers still cannot explain gold's current prices on their own, gold's reputation as a perceived haven, store of value, and non-debaseable real asset are very well suited to the current environment, in our view. Trump's second term has brought with it numerous gold-positive risks and uncertainties, and we've cited a notable negative correlation between gold prices and Trump's approval rating. We eye the upcoming midterms with anticipation, but at the moment, are focused on gold's growing contextual appeal.
RBC also said the US national debt is a cause for concern, which helps to drive gold demand.
As they said:
Perhaps the biggest sustainable driver is one that the gold bugs have been holding onto for some time — that a mountain of debt in the US and elsewhere should drive more interest in non-debaseable assets like gold. Likewise, the uncertainty of geopolitics, politics, and headline-driven volatility across assets increases the appeal of a perceived safe haven and preserver or value like gold. That's why we have stuck with our forecasts from late last year, despite a pause in some of the flows that were key underlying drivers of gold prices, because we still thought that the context of gold was unchanged.
Gold price to grind higher from here
RBC said they believe that US$4500 to US$5000 is the "sweet spot" for gold in the medium term, while "we are beginning to favour our high scenario, grinding towards US$5000/oz before year-end and higher in 2027".
This compares to the current gold price of US$4485.10.
