Gold futures are trading higher on Thursday and are now back above $4,000 per troy ounce. This morning, Wells Fargo Investment Institute raised its 2026 year-end price target to $4,500-$4,700, up from $3,900-$4,100, citing the risk of persistent geopolitical uncertainty. That comes despite the U.S. and China recently agreeing to a one-year trade truce.
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Fed Cut Boosts Rationale for Gold
On Wednesday, the Fed voted to lower the interest rate by 25 bps, providing another boost to the precious metal. Since gold doesn’t pay out interest, the case for holding it as an investment strengthens with lower rates. In other words, the opportunity cost of holding gold compared to interest-bearing assets, such as Treasury bonds, falls with lower rates.
Demand for gold remains high, led by buying from central banks and ETFs. According to the World Gold Council, demand has risen 3% year-over-year to 1,313 metric tons.
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