In the absence of a convincing explanation for Gold's rally, we are sceptical that the precious metal will be able to sustain its gains in the short term.

In particular, if US interest rate cut expectations take a new blow, as they did on Tuesday following another strong reading on US inflation, many investors could be tempted to take profits and the recent moderate downward correction could continue.

However, it is unlikely that prices will fall back to the levels seen at the end of February as the Fed is expected to cut interest rates from June, which should support Gold. However, further upside potential is likely to be limited in the medium to long term. This is because a pronounced cycle of interest rate cuts in the US is unlikely, given the persistent risks of inflation. 

We are therefore ‘only’ raising our Gold price forecast for the end of this year and the end of next year from $2,100 to $2,200.