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Amy Gower, head of metals and mining strategy at Morgan Stanley, has stated that gold's recent decline does not diminish its long-term investment appeal. Despite a drop towards a seven-week low, Gower maintains a positive outlook for gold over the next 12 months, identifying $4,000 per ounce as a significant support level. Gold prices have decreased approximately 10% over the past six months, with futures trading around $4,210.
Gower attributes the potential resilience of gold to several factors, including robust central bank purchases and concerns over government debt. In July, central banks acquired a net total of 23 metric tons of gold, with China purchasing about 20 tons. Gower noted that China's gold imports are on track to reach their highest levels since 2017, reflecting a strong domestic demand for the precious metal.
Additionally, Gower highlighted the influence of oil prices and interest rates on gold's performance. A de-escalation of the ongoing conflict in the Middle East could lead to lower oil prices, which may ease inflation expectations and reduce pressure on interest rates. This scenario could create a more favorable environment for gold, especially if bond yields decline due to market interventions or shifts in inflation expectations. Gower anticipates continued volatility in the gold market as more Federal Reserve meetings and economic data releases approach.
Source: KLEA News