Economist: Central Bank Attitude Pushes Gold Price Increase

Illustration. (Photo: Doc. Antara)

JAKARTA - Capital Market Economist and Capital Market Practitioner Hans Kwee said that the attitude of central banks in the world is one of the sentiments that has pushed for a significant increase in gold prices lately.

He said many central banks had changed their reserves to gold assets and released the United States (US) dollar currency, plus there was still a chance that central banks would take a stance to lower their benchmark interest rate going forward.

Many central banks changed their reserves to gold, releasing US dollars. In addition, the opportunity to reduce benchmark interest in the future is pushing gold up," Hans said, quoted by Antara in Jakarta, Monday, January 6.

Hans explained that the strengthening of the value of gold assets was driven by a decrease in the benchmark interest rate by the US central bank The Federal Reserve (The Fed) which pushed the US dollar index down (as well as interest).

In addition, he continued, strengthening the value of gold assets was also driven by heated geopolitical tension, particularly the conflict between Russia and Ukraine and the conflict in the Middle East related to Israel and Palestine.

He projects that the price of gold assets will reach a level of 3,000 US dollars per ounce by 2025, driven by a decline in the benchmark interest rate by the Fed and global geopolitical tensions that will continue.

"Gold may reach 3,000 (US dollars per ounce) if geopolitical tension continues and the Fed's cut in interest continues," Hans said.

On this occasion, he recommended keeping gold assets in the medium term, along with the decline in benchmark interest rates by the central bank and global geopolitical tensions that will continue.

Gold prices rose nearly 30 percent in 2024 and outperformed each commodity and several assets, which on Sunday (05/01), global gold prices were trading at the level of 2,640 per US dollar per ounce.

According to the Kitco News Annual Gold Survey, 457 retail investors participated in the survey with the majority Main Street estimating gold assets to set a new record high for trading above $3.000 per ounce by 2025.

A total of 266 retail traders or 58 percent, expect gold to be traded above the level of 3,000 US dollars per ounce by 2025, and 103 investors or 22 percent expect gold prices to be traded between 2,800 and 3,000 US dollars per ounce by 2025.

Then, as many as 58 retail traders or 13 percent, estimated that the price of gold would fall back to around 2,400 to 2,600 US dollars per ounce by 2025.