New Forecast Revealed: Where Is the Gold Price Heading?

A new review by the investment house Julius Baer presents a complex picture in global markets, characterized by a weakening dollar, strengthening gold prices, improved economic activity in Europe, and uncertainty surrounding US administration policies. Attention is also focused on developments in the bond market and US Treasury actions, which could significantly impact yields and the American currency.

One of the central topics in the review is the US Congressional elections in November 2026. Julius Baer estimates that Democrats may strengthen their position in Senate races, with the probability of full Democratic control over Congress approaching 50%. However, even in such a scenario, President Donald Trump's ability to drive change will be constrained by veto powers and Senate rules.

Meanwhile, markets are awaiting the Federal Reserve Chair's speech at the Jackson Hole conference. Julius Baer notes that this event may clarify the central bank's stance on inflation and interest rate policy, following the uncertainty left by the Fed's July communications.

The dollar is also in focus. According to the review, bond purchases by the US Treasury have contributed to lower yields and currency weakness. Julius Baer believes these moves heighten concerns about efforts to lower financing costs, leading to a downward revision of dollar-euro forecasts. The target now stands at 1.18 dollars per euro in three months and 1.20 dollars per euro in 12 months.

Conversely, Europe is showing positive signs. Business activity surveys in August indicate strengthening output and new orders, particularly in German industry, alongside moderating price pressures. Julius Baer believes that the combination of robust economic activity and more moderate inflation reduces stagflation risks, bringing Europe closer to a scenario of stable growth with low price pressures.

Dollar weakness is also supporting gold. Julius Baer notes that US bond market dynamics may reduce the risk of another sharp rise in yields, while a weaker dollar supports demand for precious metals. Accordingly, the bank raised its gold price targets to 4,500 dollars per ounce within three months and 4,800 dollars within 12 months. Silver targets have been updated to 65 dollars and 67.5 dollars, respectively.

Regarding the copper market, prices remain high. The investment house notes that the US continues to import significant quantities of refined copper while the metal accumulates in warehouses. This results in decreased supply elsewhere and higher prices; however, Julius Baer estimates this is largely an artificial market tightening, and prices may return to more economically justified levels in the medium term.

Additionally, the US Treasury has expanded its long-term government bond buyback program to address high yields at the long end of the curve. Julius Baer warns that it is too early to determine if this will successfully halt the rise in yields and that further measures may be needed.

Ultimately, the review highlights a particularly sensitive period for markets. With the dollar under pressure, gold benefiting from uncertainty, Europe showing signs of recovery, and US investors awaiting policy developments, Julius Baer emphasizes the need to closely monitor events that could impact a wide range of assets.