ANZ sees the recent retreat in gold prices from record highs as a healthy correction. Despite improved US-China trade sentiment, the medium-term macro backdrop—characterized by persistent tariff risks, rising inflation expectations, and slowing growth—remains supportive for gold. ANZ maintains a year-end target of USD 3,600/oz, with USD 3,000–3,200/oz identified as a potential buy zone.

Key Points:

• Recent Pullback from Highs:

• Macro Conditions Still Fragile:

  • Q1 US GDP contracted by 0.3% (saar)—the first Q1 contraction since 2022.

  • Fed’s Beige Book cited trade-related economic uncertainty; inflation expectations rose to 6.7% due to tariff-induced cost pressures.

• Monetary Policy & Real Rates:

  • Market now expects up to 100bp of Fed rate cuts.

  • Lower nominal rates and rising inflation will compress real rates, a traditional tailwind for gold.

• Q1 Gold Demand Resilient:

  • Total demand rose 1% y/y to 1,206t—the highest Q1 since 2016.

  • Investment demand surged to 552t (+170% y/y), led by a reversal in ETF flows (+227t).

  • Central banks bought 244t, still above average despite a quarterly drop.

  • Jewellery demand declined 19% y/y due to high prices.

  • Scrap supply remained weak despite record prices, suggesting consumers are holding for further upside.

Conclusion:

ANZ remains bullish on gold, projecting USD 3,600/oz by year-end. They see USD 3,000–3,200/oz as a key support zone where fresh investment demand is likely to re-emerge, driven by persistent macro uncertainty, accommodative policy expectations, and favorable real rate dynamics.

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