Gold's bullish momentum has rolled into a new week.
Prices extended their advance above $1 400 an ounce, near the highest level since September 2013, after the Federal Reserve and other central banks turned more dovish on monetary policy. This, combined with planned United States sanctions against Iran, as well as the coming meeting between the US and China's presidents, is creating a raft of bullish factors for the precious metal.
Bullion has regained its luster after the Fed signaled it was ready for looser policy and the European Central Bank hinted at possible stimulus, which would keep real rates low, while geopolitical risks boosted demand for havens.
Citigroup said Thursday that the enthusiasm is justified, with $1 500 to $1 600 an ounce possible in the next 12 months under a bullish-case scenario that includes borrowing costs falling below zero.
"Gold bulls are back in control," Edward Moya, senior market analyst at Oanda, said in a note, adding the metal remains supported by rising expectations of a 50 basis point cut at the Fed's July meeting.
"The question is no longer will the Fed ease, but by how much? The Fed historically likes to kick on an easing cycle with a bang and a 50 basis point cut should become the base case."
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Minneapolis Fed President Neel Kashkari said Friday he called for a 50 basis point reduction in interest rates at the central bank's June meeting. Fed Chairman Jerome Powell is due to speak at the Council on Foreign Relations in New York Tuesday where he'll discuss the challenges facing the US economy.
Spot gold climbed as much as 0.8% to $1 411.23, and traded at $1 406.08 at 10:10 am in Singapore. Prices soared 4.3% last week, the biggest gain since April 2016. A gauge of the greenback was near a three-month low.
Recent US dollar weakness and more speculative money moving into bullion are among the factors that suggest gold has more upside than downside, Martin Lakos, division director at Macquarie Wealth Management, said in a Bloomberg TV interview. The bank forecasts $1 450 by the first or second quarter of next year, he said.