Is the gold bull market not over yet? Fidelity is bullish as high as $4,000 and is betting on the dovish FED+weak dollar

The Zhitong Finance App learned that Fidelity International (Fidelity International) said that as the Federal Reserve cuts interest rates to boost the US economy, the dollar weakens, and central banks continue to increase their gold holdings, the price of gold may hit 4,000 US dollars per ounce by the end of next year.

Multi-asset fund manager Ian Samson (Ian Samson) said the company is still bullish on this precious metal. The price of gold fell after hitting a record high of more than 3,500 US dollars per ounce in April. Recently, some cross-asset portfolios have increased their gold holdings.

“The reason we are bullish is that the Federal Reserve's path to becoming dovish is becoming more and more clear,” Samson said in an interview. He added that in the past year, some funds nearly doubled their gold allocation ratio from 5%. Furthermore, August is usually a period of weak market performance, so it is “reasonable” to increase asset diversification.

Since this year, the price of gold has accumulated a cumulative increase of more than 25%. On the one hand, this has benefited from the uncertainty caused by US President Donald Trump's aggressive moves to reshape global trade, conflicts in the Middle East and Ukraine, and on the other hand, it is also supported by continued capital purchases by central banks. However, the fluctuation range of gold prices has narrowed over the past few months — as US trade negotiations have made some progress, market concerns about the worst-case scenario for the global economy have abated, and safe-haven demand has cooled slightly.

Referring to the Trump administration's tariff policy, Samson said, “Perhaps the 'end scenario' that was feared at the beginning of this year will be avoided, but in the end, about 11% of the US economy (that is, imports) will face a 'tax' of about 15% — this is equivalent to a significant tax increase, which is expected to slow down economic growth.”

Fidelity International's optimistic expectations for gold are similar to Goldman Sachs Group. Goldman Sachs has stated many times in recent quarters that the price of gold may eventually rise to 4,000 US dollars per ounce. However, there are also institutions that are cautious. Citigroup, for example, predicts that the price of gold will weaken. Currently, the price of spot gold is around $3,310 per ounce.

Federal Reserve officials will hold a monetary policy meeting this week. Although no interest rate adjustments are expected at this meeting, Chairman Jerome Powell (Jerome Powell) is likely to face opposition from some officials — who want to support a slowing labor market, which may include Governor Christopher Waller (Christopher Waller) and Michelle Bowman (Michelle Bowman), the vice chairman responsible for regulation.

Samson believes that if the US economy slows down, the dovish faction's influence in policy formulation may increase; in an environment where economic growth is weak, the US dollar will often weaken. Furthermore, as Trump continues to call for interest rate cuts, Powell (whose term as chairman of the Federal Reserve ends in May next year) is likely to be replaced by someone “more inclined” to lower borrowing costs.

Gold itself does not generate interest, so it usually benefits when the dollar weakens and interest rates fall.

Samson added that central banks around the world are likely to continue to buy gold; at the same time, widening fiscal deficits (especially the US deficit) will further strengthen the appeal of gold as a hard asset.

“Admittedly, gold has risen quite a bit, but looking back at the gold bull market cycle — for example, from 2001 to 2011, its annualized increase reached 20%; from 2021 to now, gold has also increased by 20%. Therefore, in a bull market, the current increase may not have been overdrawn.”