We raise our end-2025 forecast to $3,300/toz (vs. $3,100) and our forecast range to $3,250-3,520, reflecting upside surprises in ETF inflows and in continued strong central bank gold demand. While the uncertainty is large, we estimate that large Asian central bank buyers are likely to continue their rapid gold purchases for another 3-6 years to reach our estimated range of potential gold reserve targets.
Our base case forecast assumes speculative positioning normalizes from current elevated levels (85th percentile), while the top end of our price range reflects persistently stretched positioning amid heightened uncertainty. Medium-term price risks remain skewed to the upside, and we illustrate how, in tail-risk scenarios, gold can exceed $4,200/toz by end-2025.
We reiterate our long gold trade recommendation, but recognize that two potential (albeit uncertain) events may offer more attractive entry points if they occur. First, a Russia-Ukraine peace deal would likely trigger speculative selling, although we think a deal is unlikely to significantly alter the structurally tight supply-demand picture because Russian-produced gold exports are actually higher than before the sanctions through rerouting, and because the freezing of Russian central bank assets established a significant precedent that should keep central bank demand high.
Second, while not the base case of our portfolio strategists, a potential sharp equity sell-off may trigger margin-driven gold liquidation, which is likely to be short-lived as positioning recovers on high uncertainty.
Meanwhile, newly authorized gold allocations for Chinese insurers (~ 280t) may put a floor under prices, with demand likely to emerge on dips.
