This year's outlook for gold prices in the second half is divided among securities analysts. Amid a weakening dollar and a trend away from the dollar in the first half, the rapid increase in the price of gold, a safe asset, has led to differing opinions on whether it has reached its peak.
According to Investing.com on the 6th, as of the 4th of this month, the spot price of gold is trading at $3,342.48 per ounce on the New York Mercantile Exchange (COMEX). This is a rise of 27.4% compared to the beginning of the year. Since reaching an all-time high of $3,500 in April, the price of gold has slightly decreased and is fluctuating within a range.
As a result, market participants are focused on whether the price of gold will rebound toward $3,500 again or take a downward path.
Recently, the global investment bank Citigroup has downgraded its outlook for the price of gold to $3,300 per ounce for the third quarter (July to September) of this year. Citigroup also suggested that gold prices could drop to between $2,500 and $2,700, more than 20%, by the second half of next year.
Citigroup noted that "demand for gold investment will decrease by the end of this year and next year," adding that "the popularity of President Donald Trump and expectations for U.S. growth have begun to reflect in the market, and this trend is strengthening ahead of the U.S. midterm elections."
The massive tax cut bill announced by President Trump, known as the 'One Big Beautiful Bill (OBBBA),' is also cited as one of the reasons for the bearish outlook on gold prices. This bill aims for significant tax cuts and an expansion of fiscal expenditure. Since it is designed to have a strong economic stimulus effect, if expectations for growth increase, the demand for gold, a safe asset, is bound to decrease.
The expectation that the U.S. will reach trade negotiation results with major countries like China and the UK is also considered a backdrop for the bearish outlook on gold prices. It is believed that if tariff issues are settled and the outlook for the U.S. economy is adjusted upward, the investment demand for gold will weaken further.
On the other hand, there are predictions that the upward trend in gold prices will continue into the second half of the year. Emerging countries centered around BRICS (Brazil, Russia, India, China, South Africa) are continuing their purchases of gold as they pursue 'de-dollarization.' According to the World Gold Council (WGC), 95% of central banks worldwide expect their gold holdings to increase in the next 12 months.
Hong Seong-ki, a researcher at LS Securities, said, "Given that the large-scale gold purchases by central banks over the past three years have driven a nearly 20% increase in gold prices, it is likely that the long-term upward trend in gold prices will remain valid."
Researcher Hong stated, "Considering that the large-scale gold purchases by central banks have driven an annual increase in gold prices of nearly 20% over the past three years, the long-term upward trend in gold prices will likely remain valid."
Global investment bank JPMorgan has also expressed an optimistic outlook for the gold market. Recently, JPMorgan adjusted its outlook for gold prices next year to around $4,100 per ounce. It also noted that "gold remains one of the most effective hedging tools against stagflation, currency depreciation, and U.S. policy risks."