The gold price continues to rise as Russia and Ukraine made no progress in renewed peace talks on Thursday.
According to the World Gold Council, gold momentarily topped $US2000 ($2716.9) per ounce on the day before closing just above $US1996 ($2711.4) per ounce.
Goldman Sachs said the price could continue to trend north, with the global investment banking firm setting its sights on $US2500 ($3396.1) per ounce.
Speaking with Bloomberg Television, Goldman Sachs global head of commodities research Jeff Currie said the gold market was firing on all cylinders.
“It’s a perfect storm for gold right now,” he said. “There’s three legs to this story. One, you have strong investor demand for gold over concerns about inflation, recessions, downturn in places like Europe.
“The second leg is central bank buying … and with the situation in Russia, they’re likely to accumulate dollar in reserves they can’t do anything with. What can they do with it? Buy gold.
“Then you have central banks in places like China and Turkey diversifying for de-dollarisation reasons. Then you have diversification reasons in places like Brazil and India.”
In late February, Russia’s central bank announced it would resume gold buying from the domestic market to overcome financial instability.
Up until this point, Russian gold-buying had been suspended since the first quarter of 2020 after the country had accumulated more than 1900 tonnes since 2005.
Currie said fear-driven demand was also leading to increased ETF gold holdings, while increased physical demand also couldn’t be overlooked, with China and India particularly keen in this segment of the market.
“You put it all together – it’s the strongest demand for all three channels that we’ve ever seen,” Currie said. “The last time we saw this type of demand stream across the board was in 2010–2011, and gold rallied 70 per cent.
“Our target is $US2500, which is another $US500 ($679.2) of upside from here.”