Bloomberg Commodity Index drops to 2-year low as investors grow increasingly nervous about demand
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Max Layton, global commodities head at CITI Research, predicts gold will trade at about $2,500 to $2,700 in the second half of next year, down about $900 or so less than where it is today. Layton said CITI had been bullish on gold for the last couple of years as investors flocked to the precious metal. He said people are buying gold to hedge against a downside risks to their household wealth over fears of slowing economic growth and global uncertainty. “The move from $2,600 to $3,300 this year has been all about investors buying bars and coins, particularly bars because they’re hedging against a downside in U.S. and global growth, as well as a downside in equities related to that downside in U.S. and global growth, which has come about because of the combination of still extremely high interest rates in the U.S. by historical standards, and the tariffs.” He however expects a drop in prices due to weakening investment demand, anticipated U.S. interest rate cuts and improved economic prospects. “We’re getting close to this One Big Beautiful Bill Act passing Congress,” said Layton. “We think that is going to mark a shift in sentiment towards U.S. growth and basically a slight reduction, or even a moderate reduction, or even possibly by the end of next year, heading into the mid terms with lower interest rates as well.” Source: BN Bloomberg