"Gold to Maintain Upward Trend for the Time Being... Expecting Highs Early and Lows Later This Year"[Click eStock]

Amid the expansion of trade disputes, securities firms have forecasted that gold prices will continue their upward trend this year, similar to last year. It is analyzed that emerging market central banks' gold purchasing trend will persist for the time being, accelerated by the de-dollarization movement within China.

On the 28th, Kyu-yeon Jeon, a researcher at Hana Securities, stated, "We are raising the upper limit of gold prices this year to around $3,100 per ounce."

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Gold prices have continued to rise this year following last year. Trade dispute concerns, which have periodically surfaced since U.S. President Donald Trump's administration, are also increasing upward pressure on gold prices. Researcher Jeon noted, "Gold prices have risen about 11% over the past two months this year, showing their value," adding, "Although expectations for interest rate cuts by the U.S. Federal Reserve (Fed) have weakened, the simultaneous emergence of preferences for safe assets, inflation hedge demand, and the resumption of gold purchases by Chinese households and central banks have contributed to this."

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In particular, Chinese households, who led price increases by purchasing gold at prices higher than the international market last year, have reduced their purchases since September due to the increased price burden. However, the gold price premium on the Shanghai Exchange began to rebound this month. Although the effect is limited compared to previous years due to the sluggish economy, this is interpreted as reflecting the seasonal characteristic of increased gold demand in China around the Lunar New Year in January and February. The People's Bank of China also resumed gold purchases within its foreign exchange reserves in November last year after a six-month suspension, starting to stockpile gold.

Funds flowing into gold exchange-traded funds (ETFs) have also increased, generally linked to each country's monetary policies. Researcher Jeon analyzed, "In the case of North American ETF funds, the delay in the Fed's interest rate cut cycle reduces the attractiveness of gold as a non-interest-bearing asset," but added, "European ETF funds show relatively higher preference for gold as the European Central Bank's (ECB) interest rate cut cycle is expected to be prolonged."

Furthermore, Researcher Jeon predicted, "The upward trend in gold prices is likely to continue until the second quarter when trade disputes intensify," and "Gold prices will show a pattern of rising early in the year and falling later." He also added, "Excluding some profit-taking sales due to price burdens, gold price adjustments may occur in the second half of the year when political uncertainties and inflation concerns ease."

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