Wall Street analysts are predicting that gold will continue to rise. The SPDR Gold Trust ETF (GLD) could enjoy another good year. GLD, the largest gold ETF, reached a record high in October of $257.93 as gold peaked near $2,800. What’s next for GLD and gold?
Gold is still a hot commodity for analysts
Wall Street analysts think that gold’s price will continue to rise in 2025, as the demand for alternative assets increases.
Goldman Sachs expects the price of gold will surge to $3,000 by the end of this year. Societe Generale sees the price of gold moving to $2900 in this year. Analysts at Bank of America, Citigroup and Citigroup also see it rising to $3,000 this year.
Macquarie, on the other hand, sees gold as remaining in a narrow range due to the continued strength of the US Dollar Index. The firm expects that gold will then crawl back to modest growth by 2025.
The ongoing central bank accumulation will be the main driver of gold prices. In 2024, data released showed that banks around the world accumulated 694 tons in gold during the first nine months of the year. The majority of these purchases come from China where the central banks announced it would resume gold purchases following a six-month break.
The US public debt is on the rise
Another important catalyst for gold has been the continued rise in US and global debt. The US public debt, for example, has been rising steadily, reaching over $36.3 trillion. This trend is continuing.
Donald Trump ran on the promise of lowering the debt. However, most of his policies are likely to add trillions to the debt. Deporting illegal aliens, for example, will cost the federal government hundreds of millions of dollars.
His plans to provide more tax cuts this year will also worsen the crisis. Trump has given the responsibility of debt reduction to Elon Musk who will head the Department of Government Efficiency, which is aiming to cut spending by $2 trillion.
It will be difficult to cut government waste, because these cuts must pass through Congress. Even if all discretionary government spending was cut, the deficit would still grow because defense and social security expenditures are on the rise.
There is a chance that the price of gold will increase as investors and government worry about the US dollar’s health as a global reserve.
US Dollar Index and Bond Yields
GLD ETF could have some problems this year, as the US dollar index is on a strong upward trend. The index has increased in five straight weeks, and now sits at its highest level for over two years.
Gold is approaching the important resistance at $110 and has therefore risen almost 10% since its low point in 2024. Gold is often affected by a strong dollar, which explains the GLD ETF’s outflows for the past two months. It lost $1.1billion in November and $522m in December.
The US government bond market has also remained stable after the Fed reduced its estimate of the number interest rate reductions for 2025. The Fed now expects rates to be cut twice, rather than the four times it had previously predicted. The yield on the 10-year note fell to 4.54%. Meanwhile, 30-year and five-year notes moved down to 4.7% each.
GLD ETF Analysis
GLD ETF stayed in a narrow range over the last few weeks, as the US Dollar Index rose. After a big surge, it formed a triangle with symmetrical lines, a bullish pennant.
The ETF is still above the moving averages of 50 and 200 days. The outlook is therefore extremely bullish. Next, we’ll be watching the high from last year of $257 and then the psychological point at 300 later in this year.
This post GLD ETF Forecast as Gold Price Forms a Bullish Pennant Pattern appeared first on The ICD
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