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UBS Group forecasts gold prices could reach $2,900 an ounce by the end of 2025, driven by central bank reserve increases and strategic investments amid macroeconomic volatility and geopolitical risks. Despite potential consolidation due to a stronger dollar and interest rate concerns, gold is expected to recover, with a further rise to $2,950 by the end of 2026. Currently trading at around $2,630 an ounce, gold has seen a 28% increase this year, supported by central bank accumulation and geopolitical tensions.
Gold has surged 28% in 2024, trading near $2,630 an ounce, driven by central bank purchases, a shift to monetary easing by the Federal Reserve, and geopolitical tensions. Goldman Sachs predicts gold will reach $3,000 an ounce by the end of next year, supported by ongoing demand from monetary authorities. UBS also notes that central banks are likely to continue increasing their gold reserves for diversification amid rising geopolitical risks.
The "Trump trade" continues to influence markets as Donald Trump prepares for a potential return to the presidency, driving up US stocks, the dollar, and Bitcoin. However, with assets appearing expensive and protectionist policies potentially stoking inflation, questions arise about the sustainability of this trend amid a growing fiscal deficit and a weakening labor market. Historical patterns suggest that key investments may not maintain their momentum as they did during his first term.
Central banks globally are expected to lower borrowing costs as inflation eases from recent highs, with some emerging markets already cutting rates. While inflation has decreased, the final push to reach the 2% target remains challenging, particularly as underlying price pressures persist. Energy prices, a significant inflation driver, have retreated from their peaks, but elevated inflation continues in some regions, impacting asset prices and housing markets.
Following Donald Trump's presidential election victory, demand for US corporate bonds surged, leading to a significant drop in risk premiums. Average investment-grade bond spreads narrowed to 75 basis points, the tightest level since May 1998, as investors responded to the stock market rally and the Federal Reserve's rate cuts.
Jim Cramer reassured investors not to panic over rising bond yields, stating that the stock market has thrived even with yields at 5% and 6%. Despite a slight dip in major indexes, he highlighted that corporate buybacks and index fund inflows could counteract selling pressure, creating a temporary stock shortage.
Investors typically see stronger returns in the fourth quarter, averaging gains of 4.8% with an 82% win rate since 1980. However, notable declines occurred in 1987, 2008, and 2018. Despite current concerns over inflation and economic slowdown, a positive outlook for 2024 remains, with a year-end S&P 500 target of 6,000.
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