Demand from central banks and retail investors, geopolitical uncertainties, persistent inflation and the anticipation of interest rate cuts support a positive outlook for gold in the second half of the year, experts have said.
With more than 40 countries holding elections this year, political risk is also a major theme driving gold prices.
Gold prices have entered a consolidation phase after hitting a record high of $2,449.89 on May 20 amid a rally which happened against traditional headwinds such as a strong dollar and high interest rates.
The metal was trading at $2,300 at 9.05am UAE time on Thursday.
“Robust demand from emerging markets, especially from central banks, global geopolitical tensions and lower yields due to rate cut expectations fuelled appetite in gold so far this year,” says Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“The political uncertainties on both sides of the Atlantic Ocean, the ballooning US debt and raising worries about the safety of the greenback helped bring investors to the yellow metal this year.
“These supportive factors are still in play. Therefore, we could see gold prices advance to fresh highs, especially in the run-up to the US elections after summer. Therefore, gold outlook remains positive for the second half of the year.”
The price of gold is up about 12.9 per cent in the year to date (in US dollars).
$3,000 for gold?
The Bank of America put out a note on Monday suggesting that gold could hit $3,000 an ounce over the next 12 to 18 months. The key is investment demand, the lender said.
Data from trade body the World Gold Council suggests central banks are feeling increasingly warm towards gold as a useful financial asset rather than a historic keepsake.
On June 7, data showed that China’s central bank had paused gold purchases for its reserves in May after 18 months of buying, sending bullion to its biggest daily drop since November 2020.
However, an annual survey of central banks by the council delivered its highest share of respondents saying they expected their gold reserves to increase within 12 months due to continuing macroeconomic and political uncertainty, despite high prices for the precious metal.
Demand for gold from central banks has been elevated in the past two years as some countries diversify their foreign currency reserves amid de-dollarisation. Their demand contributed to the gold price rally in the March to May period.
The survey, which was conducted from February to April with 69 responses, showed that 29 per cent of central banks expected their gold reserves to increase in the next 12 months.
This is the highest level since the WGC began the survey in 2018, and compares with 24 per cent in 2023.
The council said 81 per cent of respondents expected global central bank gold reserves to increase over the next 12 months compared with 71 per cent a year ago.
Gold reserves rise
The top three reasons for central banks to hold gold today are long-term store of value or inflation hedge, performance during times of crisis and effective portfolio diversifier, according to the WGC survey.
While in previous years, gold’s “historical position” was the top reason to hold it, this factor dropped to fifth in this year's survey.
Central banks in emerging market and developing economies maintained their positive outlook for gold’s future share in reserves portfolios.
They were joined by advanced economy central banks, which now view gold more positively.
More than half (57 per cent) of this group said gold would account for a higher proportion of reserves five years from now, a significant increase compared to 2023, when 38 per cent of respondents indicated the same view.
“Extraordinary market pressure, unprecedented economic uncertainty and political upheavals around the world have kept gold front of mind for central banks,” according to Shaokai Fan, global head of central banks and head of Asia-Pacific at WGC.
“Many of these institutions have become more aware of the asset’s value as a way to manage risks and diversify their portfolios.”
MUFG Bank picked gold as its most favourite trade this year on a trifecta of Fed cuts, supportive central bank demand and bullion’s role as the geopolitical hedge of last resort.
Election risks
“US fiscal sustainability concerns, combined with incremental risks from the election cycle can be seen as another dimension of burgeoning structural tailwinds with a positive influence on gold buying,” says Ehsan Khoman, head of research – commodities, ESG and emerging markets for Europe, Middle East and Africa at MUFG Bank.
Central bank purchases predominantly explain the increase in global gold demand since 2023, which has offset jewellery demand that has remained stable and investment demand that has fallen, he adds.
While most central bank gold buying is now unreported, six EM central banks – China, Poland, Turkey, Singapore, India and Qatar – have been predominantly behind the reported net monetary purchases since 2023, according to MUFG Bank.
Gold has consistently held above key technical levels around $2,280, benefiting from early speculative demand from managed money traders, such as hedge funds, contributing to lower volatility than other metals, explains Ole Hansen, head of commodities strategy at Saxo Bank.
While China’s temporary pause in gold buying and subdued ETF (exchange-traded fund) investor interest due to high interest rates are expected to prolong consolidation, several factors continue to support a bullish outlook, he says.
Central bank purchases predominantly explain the increase in global gold demand since 2023
Ehsan Khoman of MUFG Bank
“Strong retail demand in China, continued central bank purchases, and geopolitical uncertainties remain key drivers. Rising debt-to-GDP ratios in major economies and persistent inflation further enhance gold’s appeal,” Mr Hansen says.
“We maintain our ‘Year of the Metal’ theme, anticipating that clarity on the timing and depth of US rate cuts will provide additional support.
“Given these conditions, we foresee continued support for gold and set a price target of around $2,500, potentially achieving this level later in the year.”
The current consolidation phase, with gold trading mostly within the $2,280 to $2,380 range, suggests that the market is stabilising at higher levels, Mr Hansen points out.
The relatively low volatility compared to other metals such as silver, platinum and copper indicates that managed money traders and hedge funds sustain their positions, avoiding major sell-offs, he says.
Furthermore, ETF investors have remained mostly net sellers since 2022, reducing speculative inflows that could otherwise increase volatility, he adds.
Gold is also poised to benefit significantly from anticipated interest rate cuts.
Lower interest rates decrease the cost of funding a gold position, increasing the metal's attractiveness as an investment.
Additionally, rate cuts often signal a weaker economy, enhancing gold’s appeal as a safe-haven asset.
Gold souq in Dubai – in pictures
“Our outlook anticipates two to three interest rate cuts in 2024, followed by similar cuts the following year. This monetary easing is expected to reduce the opportunity cost of holding non-yielding assets like gold, thereby boosting demand,” Mr Hansen says.
“Furthermore, as lower rates typically lead to a weaker dollar, gold prices denominated in USD would likely rise.”
While the current consolidation phase may persist in the short term, the anticipated rate cuts provide a supportive backdrop for higher gold prices in the medium to long term, he forecasts.
“Heading into the second half of the year, the fundamental backdrop remains positive,” says Fawad Razaqzada, market analyst at City Index and Forex.com.
“Inflation is still going strong in the US. Investors (and central banks) that missed out on the big move will be keen to get their hands on the shiny metal on any noticeable dips in prices.”
What could end gold’s bull trajectory?
Factors that could affect gold's rise are, first, an imminent peaceful resolution to the confluence of geopolitical tensions, notably in Ukraine and Gaza, Mr Khoman forecasts.
Second would be a stymie in emerging market central banks' gold-purchasing programmes, and third, a significant hawkish Fed adjustment, leading to hikes that may present escalating headwinds to gold given its infinite duration, he estimates.
INFO
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
Sholto Byrnes on Myanmar politics
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
EGYPT SQUAD
Goalkeepers: Ahmed El Shennawy, Mohamed El Shennawy, Mohamed Abou-Gabal, Mahmoud Abdel Rehem "Genesh"
Defenders: Ahmed Elmohamady, Ahmed Hegazi, Omar Gaber, Ali Gazal, Ayman Ahsraf, Mahmoud Hamdy, Baher Elmohamady, Ahmed Ayman Mansour, Mahmoud Alaa, Ahmed Abou-Elfotouh
Midfielders: Walid Soliman, Abdallah El Said, Mohamed Elneny, Tarek Hamed, Mahmoud “Trezeguet” Hassan, Amr Warda, Nabil Emad
Forwards: Ahmed Ali, Mohamed Salah, Marwan Mohsen, Ahmed "Kouka" Hassan.
More from Rashmee Roshan Lall
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
Emergency phone numbers in the UAE
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
UAE currency: the story behind the money in your pockets
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Liverpool 4-1 Shrewsbury
Liverpool
Gordon (34'), Fabinho (44' pen, 90' 3), Firmino (78')
Shrewsbury
Udoh (27'minutes)
Man of the Match: Kaide Gordon (Liverpool)
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
'Champions'
Director: Manuel Calvo
Stars: Yassir Al Saggaf and Fatima Al Banawi
Rating: 2/5
TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
Retail gloom
Online grocer Ocado revealed retail sales fell 5.7 per cen in its first quarter as customers switched back to pre-pandemic shopping patterns.
It was a tough comparison from a year earlier, when the UK was in lockdown, but on a two-year basis its retail division, a joint venture with Marks&Spencer, rose 31.7 per cent over the quarter.
The group added that a 15 per cent drop in customer basket size offset an 11.6. per cent rise in the number of customer transactions.
Company profile
Name: Thndr
Started: October 2020
Founders: Ahmad Hammouda and Seif Amr
Based: Cairo, Egypt
Sector: FinTech
Initial investment: pre-seed of $800,000
Funding stage: series A; $20 million
Investors: Tiger Global, Beco Capital, Prosus Ventures, Y Combinator, Global Ventures, Abdul Latif Jameel, Endure Capital, 4DX Ventures, Plus VC, Rabacap and MSA Capital
South Africa v India schedule
Tests: 1st Test Jan 5-9, Cape Town; 2nd Test Jan 13-17, Centurion; 3rd Test Jan 24-28, Johannesburg
ODIs: 1st ODI Feb 1, Durban; 2nd ODI Feb 4, Centurion; 3rd ODI Feb 7, Cape Town; 4th ODI Feb 10, Johannesburg; 5th ODI Feb 13, Port Elizabeth; 6th ODI Feb 16, Centurion
T20Is: 1st T20I Feb 18, Johannesburg; 2nd T20I Feb 21, Centurion; 3rd T20I Feb 24, Cape Town
The Little Things
Directed by: John Lee Hancock
Starring: Denzel Washington, Rami Malek, Jared Leto
Four stars
ICC T20 Rankings
1. India - 270 ranking points
2. England - 265 points
3. Pakistan - 261 points
4. South Africa - 253 points
5. Australia - 251 points
6. New Zealand - 250 points
7. West Indies - 240 points
8. Bangladesh - 233 points
9. Sri Lanka - 230 points
10. Afghanistan - 226 points
