Stronger Risk Sentiment Pressures Gold Prices
Gold futures opened Monday at $3,321.10 per ounce, slipping 0.4% from Friday’s close and extending a pullback from last week’s high of $3,441. Market optimism around recent global trade developments appears to be softening investor demand for safe-haven assets like gold.
The dip follows reports of a new 15% tariff agreement between the U.S. and the European Union, as well as speculation that Washington and Beijing may extend their tariff truce by another 90 days. These moves suggest greater global economic stability, historically linked to a decline in gold purchases as investors shift toward riskier assets such as equities.
Gold’s Short-Term and Long-Term Performance
Despite Monday’s decline, gold remains one of the top-performing assets over the past 12 months. The price has risen 40.2% since July 26, 2024, when it opened at $2,368.70. However, recent data reflects a downward trend: prices are down 0.9% over the past week and 0.3% over the last month.
Compared to the July 21 opening price of $3,350.30, gold has slipped slightly. Still, long-term performance suggests continued bullishness. Analysts point to increased central bank buying and persistent macroeconomic uncertainty as potential tailwinds into 2025.
Analyst Forecasts and Strategic Allocation
In May, Goldman Sachs projected gold would hit $3,700 per troy ounce by the end of the year, fueled by strong institutional demand and the ongoing unpredictability of U.S. tariff policy. If that forecast proves accurate, it would represent a 40% annual gain based on gold’s January 2 starting price of $2,633.
Historically, gold has moved in extended cycles. It surged from 2009 to 2011, then saw nearly a decade of stagnation. For investors, this underscores the importance of strategic allocation. Some may opt for a modest gold position to reduce downside exposure, while others might increase holdings to capitalize on strong upside during favorable cycles.
Market Outlook as Tariff Risks Recede
As more countries finalize trade deals with the U.S., tariffs are expected to be reassigned for non-compliant nations. This realignment could further calm financial markets, potentially keeping pressure on gold. Meanwhile, equity markets have responded positively to the clarity, further diverting capital away from gold-related assets.
Investors can track real-time movements on platforms like Yahoo Finance and use screeners to evaluate top-performing gold companies based on over 150 metrics. While recent momentum has cooled, gold remains a focal point for traders navigating the shifting geopolitical and economic landscape.