Gold’s rally may extend if central bank buying and ETF inflows remain strong, analysts predict.
Citi Research has raised its gold price target for the next three months to $3,200 per ounce from $3,000, citing strong institutional demand coupled with increased exchange-traded fund (ETF) inflows.
“In our bull case, we see gold prices reaching $3,500 per ounce by year-end, underpinned by much higher hedging/investment demand on fears of U.S. hard landing/stagflation,” City analysts said in a March 20 note.
The upward revision comes as spot gold briefly surged to a new all-time high on March 20, fueled by growing expectations of Federal Reserve interest rate cuts and persistent economic and geopolitical uncertainties. The Fed’s recent
signals of two potential rate cuts this year have bolstered gold’s appeal as a safe-haven asset.
Spot gold reached a historical peak of $3,055.96 earlier in the trading session on Thursday before
stabilizing at $3,042.03 per ounce as of 12:15 p.m. EST. With a year-to-date gain exceeding 15 percent, gold remains one of the strongest-performing major commodities so far in 2025.
According to ING analysts, the rally has been driven by trade tensions, central bank acquisitions, and sustained ETF inflows. Global gold ETF holdings have expanded by 3.5 million ounces so far this year, reaching nearly 86.4 million ounces, they noted. Meanwhile, central banks purchased 1,045 tonnes of gold in 2024, representing approximately 20 percent of total demand,
according to the World Gold Council.
“If we see more additions, this will give bullion prices a further tailwind. We believe more gains for gold are in sight,” ING analysts wrote in a
recent note, adding that ongoing trade disputes and inflation risks are reinforcing investor appetite for bullion.
Daniel Ghali, a commodity strategist at TD Securities, said in an
interview with BNN Bloomberg that central bank gold buying has been a long-term trend, driven partly by some countries’ efforts to reduce reliance on the U.S. dollar. Traditionally, nations sell dollar-denominated assets and buy gold when the dollar is strong, making a strategic hedge against currency depreciation. However, in the latest rally, the U.S. dollar has weakened, and this shift has spurred increased gold purchases from Western investors, Ghali said.
In addition, macro funds, which recently liquidated large positions, are now reentering the market as gold hits new all-time highs. This setup, according to Ghali, is fueling a FOMO (fear of missing out) effect, further accelerating gold’s upward momentum.
“These liquidations likely related to reduced risk-budgets and some profit taking into the psychological $3,000/oz. level, as opposed to a directional view,” Ghali wrote in a social media
post. “But, with macro funds having replenished their warchests, the set-up in gold has strengthened further.”
“It’s still the ‘Heads I Win, Tails You Lose’ set-up, but with demand associated with currency-depreciation fading, it’s the other side of the coin that is screaming for FOMO,” he added in a separate
post.
ING analysts and others expect that ongoing trade disputes and the implementation of new tariff measures will continue to support gold prices, with the latest developments in U.S. trade policy pointing to possible escalation of tensions with trade partners.
President Donald Trump has imposed 25 percent tariffs on steel and aluminum imports, prompting retaliation from the European Union (EU), which responded with $28 billion in counter-tariffs, though it delayed some until mid-April.
Trump hit Canada and Mexico with 25 percent tariffs from March 4, but he paused tariffs on goods and services compliant with the U.S.–Mexico–Canada Agreement (USMCA) until April 2. Canada hit back with $20 billion in tariffs on U.S. goods, and the two countries have agreed to new trade talks.
Meanwhile, Trump raised China tariffs by 20 percent on top of existing 10 percent duties, leading China to impose 15 percent tariffs on American farm goods such as pork and chicken.
With Trump considering reciprocal tariffs on all trade partners as soon as April 2, global trade tensions appear set to intensify, potentially setting the stage for more upside for gold.
Reuters contributed to this report.
