While the expectation that the US Federal Reserve (Fed) may continue to increase interest rates pressures gold prices, investment fund managers maintain their long-term rise forecasts for the precious metal. According to the Financial Times, industry representatives think that increasing public debt, geopolitical risks and central banks' reserve preferences may continue to support gold prices.
The ounce price of gold decreased by approximately 2 percent to 4 thousand 75 USD on Wednesday, October 14. Gold, which reached its historical peak in January by exceeding 5 thousand 500 USD, continues its high level despite the recent decline.
Speaking at the Precious Metals Symposium organized by the Financial Times (FT), fund managers and mining industry representatives stated that the decline in prices may not be permanent. Geopolitical tensions, increasing public debt, uncertainty in financial markets and central banks' quest to diversify their reserves were among the main factors supporting the demand for gold.
According to provisional data from the World Gold Council (WGC), central banks purchased approximately 63 tons of gold in September. This amount was the highest monthly purchase recorded since November 2024.
Troy Asset Management fund manager Charlotte Yonge predicted that gold could reach a new high in the next 12 to 18 months. Drawing attention to the increasing public debt of the USA and the deteriorating financial balances of governments, Yonge stated that increasing the money supply in possible economic recessions could strengthen the demand for gold.
Aon Investments manager Paul Carne also stated that gold could reach new record levels in the next two years. Carne said that the USA's use of the dollar as a sanctions and foreign policy tool may direct countries to alternative reserve assets, and gold may come to the fore in this process.
Endeavor Mining Chief Executive (CEO) Ian Cockerill stated that global economic conditions continue to support gold prices. Stating that the loss of confidence in traditional currencies and the quest to preserve the value of central banks' reserves increased the interest in gold, Cockerill stated that it is not known whether 4 thousand USD is a definitive bottom, but that it may be close to a strong support level before the next rise.
Suki Cooper, Head of Global Commodity Research at Standard Chartered, stated that central banks' demand for gold remains strong. Cooper reminded that some countries sold gold this year to meet their financing needs after the start of the US and Israel's war with Iran.
On the other hand, sector representatives state that the general tendency of central banks is to increase gold reserves and predict that purchases may accelerate further if confidence in the dollar decreases in global markets.
In the Financial Times report, it was stated that the Central Bank of China continues to increase its gold reserves. According to World Gold Council data, China's gold assets reached approximately 2,410 tons, while the share of gold in total international reserves increased to 9 percent.
China's increasing use of gold in its reserves stands out as an indicator of developing economies' quest to reduce their dependence on the dollar. Yonge stated that developing countries are turning to alternative reserve options and that gold may become more prominent compared to currencies such as the Euro and Japanese yen.
While long-term rise expectations for gold remain, predictions regarding the Fed's interest rate policy put pressure on prices in the short term. The fact that inflation in the USA was above expectations brought the possibility of new interest rate increases to the agenda.
The expectation that interest rates will rise weakens the attractiveness of gold, which does not provide interest income to its investors, over alternative investment instruments such as bonds. On the other hand, fund managers think that geopolitical uncertainties, increasing public debt and gold purchases by central banks may support the long-term outlook of the precious metal.
