Is gold set to shine once more?

Key arguments

• Central bank demand remains a robust structural support, with 89% of central banks expecting global gold reserves to rise and a record 45% planning to increase their own holdings.
• Rising long-maturity bond yields, particularly the 30-year UST at a 19-year high, are a key headwind, raising the opportunity cost of holding gold.
• Geopolitical tensions, fiscal deficits, and market volatility sustain safe-haven demand, while a gradually weakening USD provides a modest tailwind.
• The earlier pullback has flushed out excessive speculative positioning, removing a prior cap on gold's gains.
• The bank expects gold to grind higher towards USD 4,600 over the next 6-12 months at a moderate pace.

Corresponding source evidence

1. We believe the answer is a ‘qualified yes’, with the path higher likely to be grinding rather than explosive. · Near term
2. On balance, we see gold prices grinding higher, albeit at a relatively moderate pace, towards USD 4,600 over the next 6-12 months · 6-12 months
3. Bond yields remain gold’s chief antagonist, with the 30-year US government bond yield sitting around a 19-year high · Not specified