On September 10th, Saxo Bank predicted that gold would continue to maintain strong performance until 2025 after the US election, with its strategy director Hansen listing four major reasons behind it.

Four reasons why Shengbao Bank is optimistic about gold

① The uncertainty of the upcoming US presidential election has brought strong unease to the direction of fiscal policy and overall market stability

Hansen pointed out: "In the period of economic prosperity, especially in the period of economic depression, Trump and Biden are desperate to expand the federal deficit, and the proportion of US debt in GDP has exceeded 120%. It seems that neither party will implement fiscal tightening policies, which increases the risk of inflation, which is good for gold."

② No matter who wins the presidential election, the second factor supporting gold is its universal safe haven appeal

Hansen said, "For a long time, gold has been a safe haven in difficult times. If the US economy goes into recession, the astonishing rise in the stock market may be coming to an end, and the bond market and its recent 'inversion' seem to be telling us this. When the market expects the Federal Reserve to cut interest rates and short-term yields are lower than long-term yields, inversion occurs

③ The third key factor boosting gold is the upcoming Fed rate cut cycle

Hansen said, "Whether we are heading towards a slight slowdown or a comprehensive recession, the Federal Reserve's monetary policy decisions will play an important role in shaping the trend of gold. The interest rate cut cycle will begin at the Federal Reserve FOMC meeting on September 18, and a lower interest rate environment may enhance the attractiveness of gold, especially if the Federal Reserve cuts more than expected in the coming months

He pointed out that lower interest rates lower the opportunity cost of holding non yielding assets such as gold, making them more attractive to investors. From a historical perspective, gold has performed well during periods of declining interest rates,

④ The last key driving factor is geopolitical risk and the trend towards de dollarization

Hansen also pointed out, "The broader global environment - geopolitical tensions, central banks' efforts to de dollarize, and economic uncertainty - continues to support gold demand. In particular, central bank purchases of gold and strong retail demand in major markets such as Asia have helped maintain the rise in gold prices as investors seek stability in a volatile economic environment

He added, "Overall, the combined effect of geopolitical risks, fiscal concerns, and potential shifts in monetary policy (especially after the US presidential election) provides a bullish reason for gold as a hard asset. Gold should always be seen as something that can maintain its value, rather than something whose actual price will rise significantly (beyond the inflation rate)

Hansen concluded, "Investors may continue to view gold as a tool to hedge against uncertainty brought about by economic and policy forces. Over the past decade, the average annual return rate of gold denominated in US dollars has been 8.4%, consistently higher than the inflation rate. For long-term investors seeking to maintain purchasing power, this is an attractive option

Daily chart of spot gold