Commbank Says Gold Could Hit US$3750/oz Even After Mid-Week Stumble

(April 24, 2025 - Josh Chiat, Stockhead)

• Gold prices suffered a blip after clearing US$3500/oz on Tuesday
• As volatility strikes bullion, analysts still see tailwinds for the precious metal
• Commbank’s Vivek Dhar says the commodity could rise to US$3750/oz

Gold’s temporary fall from grace on Wednesday brought a hint of cold, harsh reality to bear for gold bulls, a reminder that prices do not go up inexorably (as lithium companies learnt with blunt force two years ago.)

But Wednesday’s carnage, which saw gold tumble from giddy levels of over US$3500/oz to under US$3300/oz and glamoured the ASX All Ords gold sub-index to a 9% single day loss, may be just a blip for the precious metal.

The pullback shows arguably just how much of gold’s strong price run is tied up in the unconventional, market chilling, vertigo-inducing economic policies of the Trump Administration.

Any move from Donald Trump to normalize his behavior, like his suggestion we would play nice in negotiations with China and reverse tariffs make to more realistic levels after each Government raised them to the point of MAD (mutually assured destruction).

He also climbed down from what seemed like an apparent attempt to limit the independence, or even seek the firing, of US Fed Reserve chair Jerome Powell.

But tariffs of a high magnitude will likely remain – the current 145% rate will be trimmed but it “won’t be zero”.

And anyone who thinks the trading environment will get more predictable could be in for a shock.

Against that backdrop, gold is retaining its position as 2025’s top safe haven asset.

Dollar sold

That’s come as the US Government has moved, seemingly with some measure of intent, to reduce the value of the US dollar in a bid to make its exports more palatable and revive domestic manufacturing.

The selloff in the USD – the USD index hit a three year low this week – and associated Treasury bonds has seen gold step into the void, Commbank mining expert Vivek Dhar says.

“What makes this recent flight to safe‑haven demand so unique is that the US dollar and Treasuries have been sold‑off as safe‑haven appeal of these US assets has declined,” he said in a note.

“This decline in safe‑haven appeal has been tied to the seismic shift in US trade policy under President Trump, and more recently, the growing tensions between the US Federal Reserve chair Jerome Powell and President Trump.

“Gold has stepped into the void as the market’s safe‑haven asset of choice – helping explain the rapid rise in gold futures so far this year.”

Investors have responded, targeting different parts of the gold market over the first four months of the year.

Gold ETF interest rose strongly in Australia in January, according to asset management giant VanEck, one of the largest investors in ASX equities.

Flows into its Gold ETF saw a massive bump in the month of January, while flows into its gold miners fund turned strongly positive in April, as the benefits of higher gold prices trickled down to producers.

Arian Neiron, the MD and CEO of VanEck Asia Pacific, said the GDX Gold Miners ETF had seen $193m of value traded in the first quarter.

At that rate the fund would see $772m of traded value across 2025, up from $532m in 2024 and $389m in 2023.

Where prices are headed

Commercial banks are typically conservative when it comes to forecasting but Commbank’s Dhar is following the gold price higher, projecting that gold could rise to US$3750/oz by year-end.

“Even though gold prices and central bank gold purchases have shown virtually no correlation in the last two years to the end of 2024, the anticipation of more central bank buying, combined with extraordinary safe‑haven demand, may see gold rise to $US3750/oz by year‑end,” he said.

“The risk that gold rises above our forecast can’t be ruled out either but our expectation for price growth to slow relative to what we’ve seen so far this year is tied to the risk that Trump continues to walk back current trade policy and that gold has already priced in significant uncertainty.”

Dhar is less convinced than other commentators that ‘de-dollarisation’, a move away from the USD as the global reserve currency, can practically be achieved.

“Gold has also been floated a potential option, especially given the increase in central bank buying since the beginning of 2022. Central bank buying of gold surged after the US led its allies to freeze Russia’s currency reserves in response to the Ukraine war,” he said.

“Countries realised that gold was a potential hedge against the US freezing currency reserves for non‑alignment with US policy. Given worries of non‑alignment with the US have only increased under President Trump, the prospect of more central bank buying is high.

“It is unlikely though that the US dollar is at any threat of replacement by gold given the costs to transport, warehouse and secure gold and the lack of returns generated by holding gold.”

While that may be true, gold has overtaken other fiat currencies like the Pound, Yen and Euro in value terms in global reserve bank holdings.