"In a scenario where already strong central bank demand is joined by strong global investment demand, gold prices could easily move much higher to generate the increase in recycled supply and destruction of jewellery demand necessary to balance the market. Mine supply cannot respond quickly, even at much higher prices. Despite already record-high prices, mine supply is basically flat at 2018 levels," writes Luke in an April 22 note.
The price of gold has risen above US$3,500 an ounce for the first time, amid worries that US President Donald Trump could fire US Federal Reserve Chair Jerome Powell.
Gold's long-term fundamentals were already looking positive. By effectively rejecting the US role as reserve currency issuer, Trump is super-charging these trends," James Luke, fund manager, metals at Schroders.
