ANZ commodity analysts said in a recent research note to clients that, although recent volatility in gold prices has raised questions about whether the record rally has peaked, they believe it has further room for growth and is unlikely to reverse anytime soon.
The major bank has boosted its price target for gold to $5,800 per ounce in Q2 2026, up from $5,400 earlier. It also believes gold remains the ultimate insurance policy amid a bleak macroeconomic outlook. Gold prices fell sharply from their record high of $5,600 per ounce to $4,900, raising concerns that they could continue to decline, similar to the peaks seen in 1980 and 2011.
Rate Cuts to Support Inflows Into Gold
According to ANZ, the macroeconomic landscape today is very different, and gold remains supported as the US Federal Reserve is expected to trim interest rates at least twice in 2026. Furthermore, easing inflation is leading markets to price in a potential third rate cut by December.
‘We expect two 25-basis-point rate cuts, one in March and another in June. This will keep real rates falling, supporting inflows into gold. Geopolitical and economic uncertainties are likely to persist, with Trump continuing to use tariffs as threats,’ analysts wrote. ‘The market’s attention is gradually shifting to the potential impact of tariffs, which has yet to fully emerge in economic and inflation data. Doubts also remain around future Fed credibility. Such a backdrop will intensify investors’ appetite for real assets like gold.’
Gold is the Ultimate Insurance Policy
ANZ stated that gold is still the ultimate insurance policy amid an increasingly volatile global financial market. Analysts noted that gold is a lucrative defensive asset as US Treasuries lose their appeal. Furthermore, rising debt levels around the world are making global bonds less desirable.
‘The global financial system is undergoing a structural shift. The US Treasury, once regarded as the world’s largest risk-free asset and the foundation for interest-bearing and tradable instruments, is facing trust issues. Soaring debt levels, concerns about the Fed’s independence, and increasing risks of sanctions have fundamentally altered its status. As a result, investors are demanding higher premiums for long-dated US Treasuries, which is evident from the widening spread between long- and short-term yields,’ according to the ANZ note.
The brokerage highlighted that gold serves as a stable asset, offering diversification when conventional assets come under pressure. ‘This is why strategic allocations to gold remain relevant, at least until geopolitical stability is achieved, the US’s structural fiscal problems are resolved, and the Fed’s credibility is restored. This is unlikely to materialise anytime soon. In this context, gold’s role as a store of value and hedge is significant,’ analysts stated.
While gold ETF demand in Western markets continues to be stable, major growth could emerge from markets such as China and India, with the potential for these regions to increase their share of global ETF holdings beyond 10%. The brokerage also retained a positive outlook for silver, but it is unlikely to outperform gold this year, given its price volatility.
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