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Gold has benefited from expected interest rate cuts in the US and rising geopolitical tensions
The gold price surged above the $1,400/oz level overnight – the first time it has broken that barrier since September 2013 – as demand for the precious metal soars on rising uncertainties.
"Gold has benefited from its safe-haven status amid a deteriorating macroeconomic outlook," analysts at Melbourne-based ANZ Banking Group said in a report published on Friday.
"We believe it will remain a highly relevant portfolio diversifier, as investors seek protection from growing uncertainties around global economic growth and rising geopolitical risks."
Prices would probably remain above $1400/oz, and gold had a “reasonable chance” of breaking the $1,500/oz mark over the next 12 months, ANZ said.
Gold has benefited from expected interest rate cuts in the US and rising geopolitical tensions.
Trade spats between the US and its major trading partners are said to be weighing on the global economy, while tensions are lifting in the Middle East.
Following attacks on tanker ships in the region last week, a US drone was shot down allegedly by an Iranian missile on Thursday. According to media reports, US President Donald Trump approved strikes on Iran shortly afterwards, but then backed down on that plan.
Gold touched a high of $1,411.82 overnight, according to Iress data. It gave up some of those gains on Friday morning and was last traded at $1,392.22/oz.
Gold's surge since the end of May has boosted JSE-listed gold miners, which have risen nearly 39% so far in 2019, versus a 12% increase in the JSE’s all-share index.
ANZ said the key risk to its bullish outlook for gold was a US-China trade deal.
"This would significantly reduce the risks to the global economy and lower rates by central banks. However, this is not our base case, with tensions likely to remain for the foreseeable future," the group said.
Trump and his Chinese counterpart Xi Jinping are due to meet at the Group of 20 summit next week to discuss trade matters.
DRD Gold was 3.5% higher on Friday morning, while Gold Fields and Harmony rose 2.1%, Anglogold Ashanti 1.8%, and Sibanye Gold 1.4%.