Peak Gold In Sight As Ukraine Peace Talks Start

Gold Prices: The Peak and Beyond

Gold prices have recently reached unprecedented heights, with a record of $2939/oz, suggesting the approach of "peak gold." This peak may be influenced by the inicio of Ukraine peace talks, hinting at a potential shift in market dynamics. The recent $40 dip after the record high indicates a minor correction, yet the proximity to $3000/oz suggests ongoing upward momentum fueled by late investors and momentum trading.

Market Shifts and Predictions

Morgan Stanley forecasts a potential decline in gold prices to $2700/oz by year-end, possibly reaching $2400/oz. This prediction is attributed to decreased demand and increased supply, marking a turning point since the war’s onset. Central banks, significant drivers of gold prices, may reduce their purchases if a peace deal materializes, impacting prices.

Geopolitical Impact on Gold

A Russia-Ukraine peace deal could diminish safe-haven demand for gold, leading to price drops as central banks buy less. The conflict has been a key driver of gold’s rise, and its resolution might reverse this trend, making gold less attractive as uncertainty decreases.

Market Dynamics and Corrections

The initial price surge was partly due to restocking in the U.S. Comex market, which drew down other markets. However, as price discrepancies narrow and U.S. stock levels stabilize, this effect wanes, signaling a potential slowdown in price increases.

Analytical Insights

Morgan Stanley’s analysis, considering factors like inflation and the dollar index, suggests gold might stabilize around $2000/oz. Despite strong central bank buying, with a 54% increase last quarter, future purchases may slow to 850 tons in 2025, especially if prices remain high or peace prevails.

Conclusion: A Slowing Momentum

While gold’s ascent was driven by geopolitical turmoil and central bank activity, indicators suggest a potential downturn. Factors like peace negotiations, reduced demand, increased supply, and diminished central bank buying could temper gold’s upward trajectory, signaling a possible end to its recent surge.