Bullish Outlook for Precious Metal
DBS Bank Forecasts $3,765 per Ounce
Financial experts at DBS Bank are urging investors to boost their gold holdings as prices are projected to hit $3,765 per ounce by the fourth quarter of 2025. This bullish forecast, driven by global trade tensions and economic uncertainties, positions gold as a prime safe-haven asset. The bank advises reducing exposure to developed market government bonds, favoring gold as a hedge against market volatility in an increasingly unstable financial landscape.
Trump’s Tariff Policies Stir Markets
Geopolitical Shifts Fuel Gold Demand
The re-election of US President Donald Trump has intensified global market turbulence, particularly through his aggressive tariff policies aimed at countering China’s influence and addressing US fiscal challenges. These policies, described as a “beautiful tariff war,” have heightened investor anxiety, pushing demand for gold as a reliable store of value. The uncertainty surrounding these trade measures is a key driver behind DBS’s optimistic gold price prediction for 2025.
US Fiscal Concerns Amplify Appeal
Rising Debt and Credit Downgrade
The US faces mounting fiscal pressures, with a projected federal budget deficit of $1.9 trillion in 2025 and debt levels expected to reach 118% of GDP by 2035. Moody’s recent downgrade of US sovereign credit to Aa1, coupled with 30-year bond yields surpassing 5%, has raised concerns about long-term fiscal sustainability. These factors are prompting investors to seek refuge in gold, which thrives in low-interest-rate environments and amid currency devaluation fears.
Strategic Investment Shifts
Diversifying Beyond US Assets
DBS Bank recommends reallocating investments away from US and Japanese assets due to fiscal risks and a weakening US dollar, driven by inconsistent policy decisions. Asian local currency bonds are emerging as attractive alternatives, while gold remains a cornerstone for portfolio diversification. The bank’s strategy also emphasizes high-quality credit with A or BBB ratings and a “duration barbell” approach, focusing on bonds with 2–3 and 7–10 year maturities.
Thailand’s Economic Outlook
Tariff Impacts and Market Resilience
In Thailand, DBS Vickers Securities predicts modest GDP growth of 1.8% in 2026 if US tariffs range between 18% and 20%, with the Stock Exchange of Thailand (SET) index targeting 1,300 points. However, higher tariffs of 36% could slash growth to 1%, affecting investor sentiment. Despite these challenges, sectors like hospitals and telecommunications remain appealing, and the Thai baht is expected to strengthen to 32.8 against the dollar in 2025, potentially reaching 32 by 2026.
Gold’s Role in Uncertain Times
Safe-Haven Asset Gains Traction
As global markets navigate trade wars, geopolitical tensions, and potential US interest rate cuts, gold’s appeal as a safe-haven asset continues to grow. DBS’s overweight stance on alternative assets, particularly gold and income-generating private equity like infrastructure, reflects confidence in their resilience. With Thailand anticipating domestic political developments and US tariff policies to shape investment sentiment, gold’s projected rise to $3,765 per ounce underscores its enduring value in turbulent times.
