Housekeeping: This is an early summary of a must-read Gold report from Goldman out today. A complete write-up will be published this week. (Read the footnote please. 1 )
Contents: (590 words)
They raise their target from $2700 to $2900
Goldman Reveals New Gold-Model Fundamentals
Goldman: Gold is Resetting Correlations with the West-
Goldman’s Secretive Buyer Discussed.
1- They raise their target from $2700 to $2900
We raise our gold price forecast from $2,700/toz to $2,900/toz for early 2025 for two reasons. First, our economists now look for faster declines in short-term interest rates in the West and China. Second, we believe that EM/China Gold purchases from London will remain structurally elevated.
2- Goldman Reveals New Gold-Model Fundamentals
The last few months have see many banks overhaul how they look at Gold pricing.which did not go unnoticed here. Goldman, along with several other Banks like, CITI, MUFG, GS, BOA, and UBS recently revealed a new way to model gold prices. The GS new model is better in that it is more specific and reveals the logic of their new analysis.
This forecast also relies on our rule of thumb that 100 tonnes of physical demand lifts gold prices by at least 2.4%, the lower bound of our regression estimate
3- Goldman: Gold is Resetting Correlations with the West
In this report, they also reveal their take on if correlations with rates are broken or not. Their conclusion is a Golden reset is in progress.
While the gold-price-to-rates relationship remains intact in changes, the ‘secret’ buyer has elevated prices and reset the relationship in absolute levels
Stated another way, Goldman is saying Gold is readjusting its correlation against western rates, as GoldFix has shared with subscribers for 18 months now. For example:
From Dollar Correlations Are Not Broken
Gold hasn’t decoupled from yields and the dollar, but the beta has decreased. While a gap has opened up, this does not mean the relationship has broken down. - TS Lombard quoted
4- Goldman’s Secretive Buyer Discussed
The Bank openly discusses increased secretive buying of Gold in London being held for an unknown buyer embedded in a walkthrough of the LBMA marekt structure.
Our estimates of China’s institutional gold purchases in the London OTC market align with the PBoC reports, but tend to be higher, start earlier, and last longer (Exhibit 4). While the PBoC reported no additional purchases after April, our nowcast estimates 50 tonnes of institutional purchases from China on the London OTC market in May,
Who is it? Although they do not conclude it, evidence points to China (ht ZH)
Premium see the whole report in PDF form here
Vince and friends....hats off to all the hard work U folks do.
Damn straight GS JPM etc know the plan for gold.
Rough crowds calling for higher higher higher--overbought overbought..news for them,,,,
Lets C monthly tik...Feb/24--gold at 2047----Sept/24--gold 2640=WOW
I wood consider that an NVDA move -----
Sept flat and would like Oct flat to set up for Brics and another possible rate cut.
As 4 miners ----Hold on as the repeat of 08-11 is just getting started .
Keep it comin VBL