Amundi Predicts Gold to Reach $4,500 as Market Stabilises

Price Drop

Gold fell below $4,000 per ounce last week, its lowest since mid‑July. The drop was linked to a broader unwind of artificial‑intelligence trades, as investors sold bullion to cover losses elsewhere. Since September the metal has lost almost 10% as hotter‑than‑expected inflation numbers raised bets that the U.S. Federal Reserve will raise rates by year‑end.

Forecast

Amundi SA, Europe’s biggest asset manager, expects gold to climb back to about $4,500 an ounce. Lorenzo Portelli, head of cross‑asset strategy at the Amundi Investment Institute, said "the worst is behind us" and noted that traders’ positions are now light, which could help a rebound in the coming weeks. He added that a $5,000 level by year‑end is unlikely, making $4,500 the base case – roughly a 10% rise from current prices.

Market Dynamics

Gold‑backed ETFs saw investors dump nearly 17 tons of holdings over three sessions. Despite the outflow, long‑term hedging demand and central‑bank buying remain supportive. Portelli expects central banks to keep buying, and he will watch the World Gold Council’s third‑quarter sovereign gold‑buying data for clues. Upcoming U.S. inflation data will also indicate whether a December rate hike is likely, which the market already prices in.

Context

Gold does not earn interest, so higher Fed rates make it less attractive. When inflation stays high without a recession, the Fed may keep rates up, pressuring gold prices. Central‑bank purchases can offset this pressure by adding steady demand.