Gold prices appear to be consolidating around the $5000 mark, yet this does not indicate the precious metal will remain at this level indefinitely. An international bank has raised its price forecast for the second quarter.

In their latest gold market analysis, commodity strategists at ANZ Bank stated they anticipate gold reaching $5800 per ounce in Q2, a significant increase from their previous projection of $5400.

The analysts commented, "Although recent market volatility has raised questions about whether gold has peaked, we believe the current upward trend is not poised for a rapid reversal."

Gold prices have retreated significantly from last month's record high near $5600, causing concern among some investors about a potential sharp decline, reminiscent of previous cycles such as the 1980 peak or the 2011 high.

However, ANZ highlighted substantial differences in current market conditions. With the Federal Reserve expected to implement at least two interest rate cuts this year, gold prices are receiving strong support. Decreasing inflationary pressures are also leading markets to anticipate a potential third cut by December. The analysts stated, "We forecast two 25-basis-point cuts, one in March and another in June. This will keep real interest rates on a downward trajectory, thereby encouraging inflows into gold. Persistent geopolitical and economic uncertainty, with ongoing tariff threats, will likely maintain investor focus on gold's potential benefits. Attention is shifting towards the inflationary impact of tariffs, which is not yet fully reflected in economic data. Concurrently, concerns regarding the Federal Reserve's future credibility remain. This backdrop will strengthen investor interest in tangible assets like gold." The bank emphasized that beyond U.S. monetary policy, gold remains the most reliable hedge against growing uncertainty in global financial markets.

The analysts added that gold remains an attractive safe-haven asset as the appeal of U.S. Treasury bonds diminishes. This is not solely a U.S. issue, as rising debt levels globally are reducing the attractiveness of government bonds worldwide, including Japanese government bonds.

They noted, "The global financial system is undergoing a structural shift. U.S. Treasury debt, once considered the world's premier risk-free asset and the foundation for interest-bearing and tradable instruments, is now facing a crisis of confidence. Soaring debt levels, concerns about Federal Reserve independence, and increasing sanctions risk have fundamentally altered its status. Consequently, investors are demanding higher premiums for long-term U.S. debt, evident in the widening gap between long and short-term yields."

"Gold serves as a transitional asset, offering stability and diversification when conventional assets are under pressure. This is why strategic allocation to gold remains crucial, at least until geopolitical tensions ease, structural U.S. fiscal issues are addressed, and Fed credibility is restored—developments unlikely in the short term. In this environment, gold's role as a store of value and risk hedge becomes particularly important."

Examining different segments of the gold market, ANZ indicated that while central bank demand is expected to stay robust through 2026, broader investor demand is anticipated to be the primary driver this year.

The analysts pointed out significant potential for investors to shift into gold ETFs, even at elevated price levels.

They stated, "We anticipate continued inflows into gold ETFs, with total holdings potentially exceeding 4800 tonnes this year. While Western markets continue to support ETF demand, significant growth is also expected from emerging markets like China and India. These regions could see their share of global ETF holdings rise above the current 10%." They added, "A potential risk is that heightened geopolitical or political risks could trigger a rotation from equities and bonds into gold. Gold ETF assets account for less than 3% of total stock and bond holdings. This implies that even a minor asset allocation adjustment could have a substantially positive impact on gold prices."

As of February 17, 10:35 Beijing Time, spot gold was quoted at $4962.80 per ounce.