‘All that glitters is fear’ as $5,000 gold is now ‘increasingly inevitable’ – Societe Generale

Commodity

Summary:

Societe Generale said $5,000 gold is “increasingly inevitable,” citing surging ETF inflows, central-bank demand, and rising global uncertainty. The bank now targets $4,217 by end-2025 and $5,000 by 2026.

With gold already trading over $4,100 on Monday afternoon following last week’s unprecedented break above $4,000 per ounce, even a conservative projection of the yellow metal’s medium-term investment demand suggests the price could reach $5,000 per ounce by the end of next year, according to commodity analysts at Societe Generale.

In the French banking giant’s latest commodity research report published Monday, analysts said that the gold price appears poised to gain another $1,000 in relatively short order.

“Last week, gold prices reached $4,042/oz, just $276/oz below our bullish $4,318/oz Q426 forecast we published just one month ago,” they wrote. “As of this morning, prices have risen to $4,072/oz. With ETF flows remaining strong, central bank buying expected to be resilient, we feel confident and compelled to update our target prices for gold.”

“We now see prices reaching $5000/oz by the end of 2026, as the rate of flows has surpassed our initial assumptions,” they said. “Despite having no clarity on positioning (flows) of hedge funds, we have observed what can only be described as extremely strong, admittedly higher than we forecasted, positive ETF flows in the last few weeks. Why is this increase in flows happening now? We have previously noted a strong relationship between ETF flows and uncertainty levels since the Trump victory in November 2024 and believe for now, this to be a critical factor in understanding part of the price action.”

SocGen analysts cautioned that the latest monthly FRED uncertainty indices from September do not take into account China’s sweeping export controls on rare earths on October 9th. “This index would also fail to capture that President Trump then announced, last Friday, to impose additional 100% tariffs on all Chinese goods and almost immediately signal openness to reach a deal to quell trade tensions,” they said. “However, stepping back from these recent events, we do note that in China the general (and trade) uncertainty indices dropped 80 (100) points during the month of September, yet Chinese ETF gold holdings rose to slightly 193t from 189t.

‘All that glitters is fear’ as $5,000 gold is now ‘increasingly inevitable’ – Societe Generale_1

“Meanwhile, using our preferred weekly U.S. uncertainty index, which captures the period when China announced the rare earth export controls and Trump’s response last week, the level of uncertainty jumped to 354 - an increase of 18 points over the week and an increase of 44 points over the month (see upper right graphic),” they noted. “This, 354-level index, is still three times the level witnessed the 5 months prior to the U.S election.”

The analysts said that under the circumstances, it was not surprising to see global gold ETF flows rise by 23 tonnes over the last week – and by 100 tonnes in the last month alone. “Critically, however, our China economics team highlighted on Sunday there is less than a 30% chance of the new tariffs materializing, but these scenarios, realized or not, seem to cause massive flows into gold ETFs,” they wrote. “We cannot imagine a situation where we return to pre-Trump index uncertainty normalcy over our forecast horizon, so ETF flows are a key component to our price forecasting.”

SocGen said they maintained the core assumptions in their September forecast. “Specifically, in that outlook, we presented the case for extremely resilient gold investor and central bank demand, and we outlined that since 2022, the average quarterly increase in flows has been 72.5t across all managed money, ETFs, central banks and demand for coins and bars,” the analysts said. “For ETFs in particular, (where we can currently observe almost real time transparency on flows), quarterly changes have averaged +31.5t since 2017.”

They added, however, “a highly significant 100t of flows into global gold ETFs, 69t more than ‘normal’” through the end of Q3. “This flow by itself partially explains the significantly increased gold price over the month of September,” the analysts wrote. “These elevated ETF flows, the highest level we have seen since Q3 2020 (when we witnessed 238t of positive flows) are significantly higher than our original flow assumptions, and explain, according to our framework, roughly $160/oz of the rise in gold prices over the course of the last three months.”

SocGen analysts said they continue to take “a conservative and cautious approach to flow forecasting and only assume an additional 67t of gold is purchased each quarter above ‘normal’ levels, for all categories of flows” – including central banks and ETFs – across all quarters.

‘All that glitters is fear’ as $5,000 gold is now ‘increasingly inevitable’ – Societe Generale_2

“We do this despite the recent elevated uncertainty but maintain the view that central banks accumulate gold so the percentage is higher in their total reserves,” they said. “Therefore, we continue to add this incremental amount to average demand and use that in the model framework shown in the [above] chart to forecast prices through to the end of 2026 (our forecast horizon). Recalibrating our gold framework to forecast from today’s gold price (i.e., marking to market the base price but leaving assumptions unchanged), the model points to $4,217/oz by the end of 2025 and $5000/oz by the end of 2026, a 14% increase from our $4,300/oz we released in September.”

“Recognizing our conservative assumptions on ETF and central bank flows, we view the upside risk to our forecast is significantly greater than the downside,” they added.

Spot gold continues to rise further above the $4,100 per ounce level on Monday after setting a fresh all-time high of $ 4,117.42 just before 1:30 pm EDT.

‘All that glitters is fear’ as $5,000 gold is now ‘increasingly inevitable’ – Societe Generale_3

Spot gold last traded at $4,106.09 for a loss of 2.23% on the session.

Source: kitco

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Daniel Carter

Economic

The country aims to unveil the initiative at the COP30 world leaders summit in Belem on Nov. 6-7 and is currently drawing up a list of potential signatories, according to people familiar with the matter, who requested anonymity to discuss private details. India and Italy have signaled their intention to join, one of the people said.

Sustainable fuels usually include liquid biofuels, biogases and green hydrogen, along with solutions like e-fuels, which are made using captured carbon dioxide and renewable electricity. An early round of discussions on the plan in Japan last month indicated nations would pledge to lift output from a base year of 2024.

Brazil's government didn't immediately respond to a request for comment.

The pledge is designed to address a perceived hole in a landmark deal struck at COP28 to transition away from fossil fuels, which also included promises to triple renewable energy capacity globally and double the average annual rate of energy efficiency improvements by the end of this decade. Sustainable fuels are seen as a key tool to cut emissions in some of the hardest-to-decarbonize sectors, like aviation.

Accelerating deployment of the technologies could deliver investments of as much as $1.5 trillion between 2024 and 2035 and create 2 million jobs, the International Energy Agency said in an Oct. 13 report.

Brazil is a biofuels powerhouse. A program started in the wake of the 1973 oil crisis created a domestic ethanol industry, and most cars in the country can now run on gasoline, ethanol or a blend. Brazil is the second-largest ethanol exporter in the world.

Yet crop-based biofuels in particular are controversial, with environmental activists warning that they can aggravate food and land insecurity, harm biodiversity and actually increase emissions. By comparison, the market for e-fuels, which can in theory be carbon neutral, is nascent and expensive. Critics say that the power generated by wind and solar can be better used elsewhere.

A global declaration could help spur investments in the technologies, as well as create an international set of standards covering how much CO2 can be emitted during their production and from possible knock-on effects on the food supply and biodiversity, the people said.

The European Union is weighing whether to sign but has reservations about the role of biofuels, said another of the people. Italy has been pushing to exempt cars running on biofuels from the EU's combustion engine ban that takes effect in 2035.

Italy and the EU have been contacted for comment. India's government didn't immediately respond to a request for comment made outside usual office hours.

Brazil is pitching the pledge as a key pillar of its Action Agenda for COP30, as it tries to focus the climate talks on implementation of promises that have already been made. The country is also working on a Carbon Markets Coalition that aims to align standards of different national systems.

Source: Bloomberg Europe

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Stocks

A record share of global fund managers said artificial intelligence stocks are in a bubble following a torrid rally this year, according to a survey by Bank of America Corp.

About 54% of participants in the October poll indicated tech stocks were looking too expensive, an about-turn from last month when nearly half had dismissed those concerns. Fears that global stocks were overvalued also hit a peak in the latest survey.

US stocks have scaled multiple records, driven by enthusiasm around AI spending and related productivity benefits. The tech-heavy Nasdaq 100 has rallied 18% this year, lifting its forward price-to-earnings ratio to nearly 28, above an average of 23 over the past decade.

That’s led some market participants to question if valuations have overshot the cohort’s earnings outlook, although Goldman Sachs Group Inc. strategists have said it’s too early to be afraid of a tech bubble.

Fund managers’ equity allocation also reflects some optimism. The BofA survey showed exposure to US stocks rose to the highest in eight months — stretching back to before tariff anxieties took hold. Worries about a recession subsided to the lowest since early 2022.

Cash holdings declined, but BofA strategist Michael Hartnett said unease over AI as well as concerns around the private credit market were tempering “full-bull” sentiment.

Renewed worries about a US-China trade war have roiled the mood more broadly in recent days. The Nasdaq 100 has led declines in the US, and futures tracking the benchmark were down about 1% on Tuesday.

The BofA survey showed an AI bubble was viewed as the biggest tail risk, followed by a resurgence in inflation and worries about the loss of Federal Reserve independence and dollar debasement.

The poll was conducted between Oct. 3 and Oct. 9, and canvassed 166 participants with $400 billion in assets.

Source: Bloomberg

Risk Warnings and Disclaimers

Add to Favorites

Samantha Luan

Economic

Political

Forex

Palestinian-Israeli conflict

Israeli Defense Minister Israel Katz said on Sunday that the Israeli military would destroy tunnels in Gaza after the remaining Israeli captives are released by Hamas, which has happened on Monday."Israel’s great challenge after the phase of returning the hostages will be the destruction of all of Hamas’s terror tunnels in Gaza, directly by the IDF and through the international mechanism to be established under the leadership and supervision of the United States," Katz wrote on X.

“This is the primary significance of implementing the agreed-upon principle of demilitarizing Gaza and neutralizing Hamas of its weapons. I have instructed the IDF to prepare for carrying out the mission,” he added.

According to the outline of the Gaza ceasefire proposal released by the White House, all “military, terror, and offensive infrastructure, including tunnels and weapon production facilities, will be destroyed and not rebuilt,” and there will be a “process of demilitarization of Gaza under the supervision of independent monitors.” But the details of how those steps will be taken, including who will be doing it, are unclear. A senior Hamas official has also said that Hamas won’t disarm unless it can hand its weapons to a Palestinian state.

So far, Israel and Hamas have just entered the first phase of the ceasefire deal, which involves the release of the Israeli hostages in exchange for thousands of Palestinians held in Israeli jails, the IDF pulling back to an agreed-upon line, and Israel allowing more aid to enter Gaza. Details on implementing the rest of the agreement still need to be worked out in negotiations between Israel and Hamas.Katz’s comments come as many are concerned Israel will restart its brutal war once Hamas releases the Israeli captives. Also on Sunday, Israeli Prime Minister Benjamin Netanyahu said the military “campaign is not over,” though he could be referring to other areas where Israel is at war or potential escalations elsewhere in the region.

“And I want to say: Everywhere we fought – we won. But in the same breath, I must tell you: The campaign is not over. There are still very great security challenges ahead of us,” Netanyahu said, according to a statement from his office. “Some of our enemies are trying to rebuild themselves to attack us again. And as we say – ‘We’re on it.'”According to a report from Israel Hayom, the US has given Israel a guarantee that it would back Israeli military action if it determined Hamas violated the deal in a way that “poses a security threat.” The report said the understanding “constitutes a side agreement” between the US and Israel.The US gave Israel a similar side deal for the November 2024 Lebanon ceasefire agreement, which Israel continues to violate on a near-daily basis.

Source: Zero Hedge

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Michelle

Economic

Forex

The British economy faces a growing risk of a hard-landing, Bank of England policymaker Alan Taylor said on Tuesday, reaffirming his calls to speed the pace of interest rate cuts.

Taylor, an external member of the BOE’s Monetary Policy Committee, made the remarks as part of a broader speech about the impact of tariffs on the British economy. The economist and Columbia University professor said downside risks in the UK were fueling concerns that the British central bank “may have braked too hard” while raising interest rates to combat inflation in the wake of the pandemic and Russia’s invasion of Ukraine.

While Taylor said he believed that a “bumpy landing” had eclipsed a soft landing has the most likely outcome for the UK, he warned that the risk of a hard landing was growing. In that scenario, weak domestic demand can prompt a more forceful downturn, whereby recession dynamics kick in a way that’s difficult to contain or reverse, he said.

“This was a remote and low probability event a year ago, but the risk is rising,” Taylor said at King’s College, Cambridge. “The probability of this outcome is now not trivial.”

Data released earlier on Tuesday showed that UK unemployment unexpectedly rose and wage growth slowed more than forecast, prompting traders to add to bets on further interest-rate cuts from the BOE. The jobless rate climbed to 4.8% in the three months through August, the highest since May 2021 when Covid restrictions were in place, the Office for National Statistics said.

There was further bad news for Chancellor of the Exchequer Rachel Reeves ahead of what’s shaping up to be a challenging budget on Nov. 26. In its latest forecasts, the International Monetary Fund said Britain will suffer the highest inflation of any Group of Seven country next year and the weakest growth in living standards.

Taylor has emerged as one of the MPC’s most dovish members since joining the panel a year ago, having voted to cut rates at almost every meeting. He’s worried about a rapidly deteriorating economy, while colleagues such as Megan Greene have argued for keeping borrowing costs on hold until at least March due to worries about lingering price pressures.

Traders fully priced two quarter-point interest-rate cuts through next year earlier Tuesday, with the first point cut expected in by March.

“By maintaining what I think is a too restrictive path of interest rates, we may have braked too hard, such that inflation cannot smoothly return to target with the economy close to potential,” Taylor said.

Taylor said he saw more evidence that China was rerouting cheap goods destined for the US to the UK. He said that underestimating the impact of trade diversion may cause inflation to come in below the 2% target.

Taylor’s comments contrast with views held by fellow external rate-setter Catherine Mann, one of his most hawkish colleagues. In a recent interview with Bloomberg TV, Mann dismissed the effects of trade diversion on inflation, arguing that domestic factors will prevent firms from passing on lower prices to consumers.

An imported good “coming in on the dock there, still has to make it to the shelf in the UK, and that gets us back to the domestic foundations for the inflation pressures in the UK... whatever is happening with tariffs abroad,” Mann said. “The domestic component is the more important issue that I need to face.”

But Taylor argued that those domestic inflationary forces are receding. He said that wage settlements are set to end the year around 3.5% and are likely to decline to 3%, close to the BOE’s preferred rate, as soon as next year.

“As I see it, in an economy with rising unemployment and weak demand, wage settlements will be pushed down, and wage-led domestic inflation will not re-kindle an upward spiral,” Taylor said.

Source: Bloomberg Europe

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Commodity

Shares of U.S. rare earth miners rallied in premarket trade on Tuesday, extending sharp gains from the previous session after U.S. President Donald Trump threatened China with 100% tariffs over Beijing’s strict export controls on critical minerals.

Critical Metals jumped more than 39% in premarket, USA Rare Earth rallied 9% and MP Materials

rose 5%. Shares of Energy Fuels were last seen up 11%, while NioCorp Developments

stood nearly 10% higher.

The moves come as investors keep a close eye on the potential for a renewed trade spat between the world’s two largest economies.

Trump on Friday announced the U.S. would impose new tariffs of 100% on imports from China starting from Nov. 1, adding that the White House would also slap export controls on “any and all critical software.”

The U.S. president appeared to water down his rhetoric on Sunday, however, saying the situation with Beijing will “be fine.”

China on Thursday announced a new framework for restricting rare earth exports in a move that was seen as a stark warning to the West — and a reflection of the deepening mistrust between Beijing and Washington.

U.S. rare earth stocks posted bumper gains on Monday. Critical Metals closed the session up more than 55%, while MP Materials rose 21% and USA Rare Earth popped 18%.

China is the undisputed leader of the critical minerals supply chain, producing nearly 70% of the world’s supply of rare earths from mines and processing almost 90%, which means it is importing these materials from other countries and refining them.

Western officials have repeatedly flagged Beijing’s supply chain dominance as a strategic challenge, particularly given that critical mineral demand is expected to grow exponentially, as the clean energy transition picks up pace.

Source: cnbc

Risk Warnings and Disclaimers

Add to Favorites

Adam

Forex

Markets have recently been shaken by China restricting exports of rare earths and Trump responding with new tariffs. Trump’s more positive comments have eased some concerns, but investors are keeping a close eye on upcoming talks between the US and China.

In Japan, the political scene has changed, with Sanae Takaichi, who favors lower government spending, becoming the leader of the ruling party. At the same time, the Bank of Japan’s signals suggest interest rates are unlikely to rise soon. These factors put pressure on the USD/JPY, which could push the USD/JPY pair back into an upward trend.

US Moving Without Macroeconomic Data

The ongoing US government shutdown is affecting financial markets in two ways. First, it delays the budget process, leaving uncertainty about how it will be resolved. Second, key economic data are not being released because the statistics bureau is closed.

As a result, we do not have updated information on the labor market, and this week’s inflation figures are in doubt. This is especially important with the Federal Reserve meeting at the end of the month. The market expects a 25-basis-point rate cut with almost full certainty, though there is a small chance the Fed might pause without the latest data. That scenario is unlikely, but it cannot be completely ruled out.

If normal government operations resume and labor market data are released before the Fed meeting, the market will use that data as the benchmark for expectations.

USD/JPY Clears Key Barrier, Eyes Fresh Highs Above 158 Amid Japan’s Dovish Signals_1

In Japan, both the government and the Bank of Japan have sent dovish signals. Governor Ueda highlighted uncertainties around U.S. tariffs and wage trends, reducing expectations for an interest rate hike this year. On top of that, the rise of Sanae Takaichi, a supporter of Abenomics, as the new leader of the ruling party adds to yen weakness, which could push the USD/JPY pair back into an upward trend.

USD/JPY Technical Analysis

The recent surge in USD/JPY allowed it to break past resistance around 151 yen per dollar. This clears the way for the uptrend to continue, with the next target near this year’s high at 158 yen per dollar.

USD/JPY Clears Key Barrier, Eyes Fresh Highs Above 158 Amid Japan’s Dovish Signals_2

The previous resistance has now turned into key support, where buyers are holding the line for now. If sellers manage to push through, the correction could reach around 150 yen per dollar, but the overall uptrend is still expected to continue.