Amundi SA, Europe's largest asset manager, forecasts gold prices recovering to around $4,500 an ounce following a selloff that dragged the metal to a three-month low. "The worst is behind us," said Lorenzo Portelli, head of cross-asset strategy at the Amundi Investment Institute, adding that traders' positions are light and favor a rebound in the coming weeks. Gold dropped below $4,000 an ounce last week to the lowest since mid-July, caught up in the broader unwinding of the artificial intelligence trade as investors sold bullion to cover losses elsewhere. The metal remains close to that threshold after losing nearly 10% since September, as hotter-than-expected inflation prints have bolstered expectations for the Federal Reserve to raise interest rates by year-end.
Portelli stated the market has already "priced in the worst scenario for gold," — inflation without recession — which would make the case for aggressive Fed hikes, a headwind for non-yielding gold. The current economic outlook does not call for more hikes than markets have already priced in. Still, gold is unlikely by year-end to reach the previously expected $5,000-an-ounce level.
An increment of at least 10% from the current level to around $4,500 is now the base case. Adding pressure, investors in gold-backed exchange-traded funds offloaded nearly 17 tons in holdings over the last three sessions. Longer-term drivers, such as demand to hedge against macroeconomic uncertainty, remain supportive.
Purchases by central banks are likely to continue supporting prices, with investors watching third-quarter sovereign gold-buying data from the World Gold Council. Upcoming US inflation data will offer clues to Fed policy.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing