After breaking the significant milestone of $2800 at the end of October, international gold prices experienced a short period of adjustmentHowever, the market showed resilience, as demonstrated on the 11th when COMEX gold futures for February delivery surged nearly 1.5%, reclaiming the $2750 levelThis uptick was largely influenced by the latest inflation data, which reinforced expectations of a potential interest rate cut by the Federal Reserve.

Forecasts released in research reports this week suggest that international gold prices could reach $3000 by the end of next yearThe anticipated shift in monetary policy, particularly the possibility of the Federal Reserve reducing interest rates, is viewed as a significant factorFurthermore, external influences such as central bank purchases, inflows into exchange-traded funds (ETFs), and the perceived safety of U.Streasury securities are also considered to be potent drivers for increasing gold prices.

While a stronger U.S

dollar typically exerts downward pressure on gold prices, recent market activities have showcased that gold remains a coveted assetAs of now, gold prices have risen nearly 25% since the beginning of the year, elevated by factors such as geopolitical risks and a pivotal shift in the Federal Reserve's monetary policyRecent data from the Bureau of Labor Statistics indicated that the Consumer Price Index (CPI) for November met expectations, which bolstered the prospect of an interest rate cut by the Fed and attracted additional capital into the market.

Significantly, gold underwent a short-term correction, with prices dropping as much as 6%. Concerns surrounding the election of a new president and potential policy implications added to the market's volatility, leading to a rise in the U.Sdollar index and bond yieldsIt is crucial to note, however, that recent analyses propose a counter-narrative to the commonly held belief that a prolonged strengthening of the dollar will inhibit gold’s upward trajectory

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Reports suggest that gold prices are significantly contingent upon the extent of any forthcoming interest rate cutsFor instance, if the Federal Reserve were to lower rates by 125 basis points by the end of 2025, gold could increase by 7%, potentially reaching $3000.

Furthermore, commodity analysts, including Daan Struyven, argue that gold serves as an effective hedge against risks associated with rising tariffs and escalating trade tensionsObservations from the market reveal an interesting trend where the premium on New York gold futures over the spot price has been expandingOn the 11th, during morning trading in London, February gold futures were seen trading at a premium of $60 per ounce above the spot market price.

Nicky Shiels, the head of metals strategy at MKS Pamp, stated that this dynamic reflects a preemptive response to tariff announcementsShe noted the activity of banks and funds buying COMEX futures while selling contracts in London, thus influencing price fluctuations significantly

John Reade, a strategist at the World Gold Council, commented that if market participants perceive a substantial likelihood that tariffs will affect imports of gold, silver, and copper, it makes sense for them to cover any short positionsHe further articulated that although such maneuvers may incur losses, the potential costs of not acting could be steep - highlighting that a 10% tariff could mean nearly $300 in losses per ounce of gold for traders.

Key factors contributing to bullish sentiment around gold include increasing demand from central banks around the world and a notable inflow into gold ETFsRecent data from the People’s Bank of China indicated that by the end of November 2024, China’s official gold reserves amounted to 72.96 million ounces, a rise of 160,000 ounces since the end of OctoberThis marks the first increase by the central bank in six months and indicates a significant commitment to gold as a strategic asset.

In a recent report regarding gold demand trends, the World Gold Council highlighted that global gold demand in the third quarter of this year increased by 5% year-on-year, reaching a total of 1313 tons

This demand prompted the overall value of gold to surpass $100 billion for the first timeStrikingly, gold ETFs emerged as a robust player in the market, accumulating a net inflow of 95 tons over three months, which marks a significant trend since the beginning of 2022. The World Gold Council suggests that sustained interest in gold ETFs is likely if the Federal Reserve continues along the path of lowering interest rates.

In line with this, Max Layton, Citigroup's global head of commodity research, expressed optimism regarding gold's price trajectory, projecting that within the next 6 to 12 months, gold could potentially challenge the $3000 per ounce markThis outlook views gold not merely as a commodity but as a pivotal financial reserve during periods of heightened economic uncertainty in the U.Sand Europe, which, in turn, is expected to bolster both ETF interest and overall investment demand.

On the flip side, there has been renewed scrutiny regarding the scale of U.S