Gold’s rally continued in mid-October, fueled by global economic uncertainty such as rising tensions in the Middle East, looming US election uncertainty and de-dollarization.

Analysts predict that upcoming interest rate cuts by the Federal Reserve and other central banks, which will reduce the cost of holding interest-free investments, will further spur increased demand for gold-backed ETFs.

That trend is likely to attract underinvested asset managers in the West, who have been net sellers since May after the Fed’s aggressive rate hike, according to Saxo’s head of commodity strategy.

Commenting on the recent moves in gold prices, Ole Hansen noted in a market update that the fear of missing out is also forcing some investors to join the rally.

"Gold's record rally continues, and after another shallow mid-month correction that saw buyers pull back above $2,600, spot bullion topped $2,700 to record its sixth record high this year,” Hansen said.

"Having already jumped almost 40 percent over the past 12 months, there is no doubt that many potential investors are balking at the prospect of paying record prices, but the fear of missing out on the ongoing rally is ultimately forcing many to jump in.""

Acknowledging that the ability to predict the next level is increasingly down to guesswork, Hansen highlighted predictions that gold could head towards $3,000, citing a recent survey at the London Bullion Market Association meeting that forecast gold to reach 2 $917.40 within one year.

Similarly, Gary Duggan, CEO of The Global CIO Office, expects the price of gold to continue to rise, but he believes that the sharp increase in its value in recent quarters probably has more to do with the continued diversification of the central bank. , especially in developing countries.

“The World Gold Council reported record levels of central bank buying in the first half of this year, with 14 emerging market central banks active buyers of the yellow metal. For central bankers, higher prices are not a reason to refrain from buying gold, but rather evidence of why they are buying,” Dugan said.

"Last week, several EM central bankers spoke at the London Bullion Market Association conference in Miami, reiterating their desire to continue to diversify their foreign reserves through gold purchases."

Noting that it doesn't make "much sense to assign a 'fair value' to gold," Duggan said, "We believe gold warrants a significant strategic allocation of at least 5 percent in a multi-asset portfolio."

The Gold Price Rally in 2024 hit new highs in the month of September, setting new records on eight separate occasions, according to the World Gold Council (WGC).

At the time, the WGC noted that this "stellar" month for gold was driven by a weaker US dollar as the Federal Reserve began its easing cycle with a 50 basis point rate cut, along with rising geopolitical tensions in the Middle East.

Looking ahead, the WGC highlighted the strong potential for a gold-friendly environment.

"Amid a high correlation between stocks and bonds and changing macro phases, the outlook for gold offers investors diversification and a hedge against broader portfolio risk," it said.

"Adding to this support from central bank buying, rising demand from key markets such as India and the return of Western ETF investors and the recent escalation of tensions in the Middle East, gold is well positioned to benefit from these developing market conditions."

Speaking to InvestorDaily on Monday, WGC's Shaokai Fan added: "Gold's price performance has caught the world's attention. Lower interest rates, geopolitical uncertainty and heightened investor focus were catalysts for the rally.

“Although the WGC does not forecast the price of gold, easing interest rates has historically been positive for gold. As central banks continue to cut interest rates, investors are further incentivized to turn to gold as the cost of holding the metal falls."