Gold Prices Soar to Three-Month High Amid Central Bank Buying
Gold prices have been on the rise, hitting $4,680 this week, marking its highest level in three months. This surge is fueled by a weak US dollar and record central bank buying, which has raised concerns that gold may reach $5,000 as investors shift their focus.
The World Gold Council reports that global net purchases of gold have remained above 1,000 tons annually, with persistent institutional demand acting as a strong support base for prices. According to the Bank of America Global Fund Manager Survey, 16% of managers believe that gold is undervalued, the highest level since March 2023.
However, there are some risks involved in this rally. The CME Group's FedWatch tool puts the probability of a rate hike at the December meeting at around 71%, which usually depresses gold prices. Additionally, higher oil prices and persistent inflation could limit further gains.