GOLD PRICES rallied $15 per ounce from a new 2-week low of $1257 in London on Wednesday morning, as major government bond prices rose, edging interest rates down, while European stock markets slipped.
Energy prices fell, but base metals rose again, and silver tracked gold prices higher to reach $17.32 per ounce – only 1% down from the end of last week.
The single currency Euro also recovered earlier losses to the Dollar on the FX market, capping the gold price for German, French, Italian and Spanish investors at €1117 per ounce.
Halving the week's earlier 2.5% drop versus the Dollar, gold prices had already crept higher against the Chinese Yuan in overnight trade, with the new Shanghai Gold Price benchmark extending its premium above global spot quotes to $4.60 per ounce at the afternoon 'fixing'.
"Gold can go a lot higher," reckons US investment and London bullion bank J.P.Morgan's global head of fixed income, FX and commodities, Solita Marcelli, speaking to CNBC.
"We are telling clients to position for a new and very long bull market," she said, targeting $1400 gold by year-end.
Fellow US investment bank and London bullion market-maker Goldman Sachs also raised its gold price targets, hiking its 3, 6 and 18-month forecasts by 9%, 12% and 15% respectively.
But after being forced to close their short gold recommendation to clients by New Year 2016's sharp rebound, the team led by Jeffrey Currie still expects a summer drop to $1200 per ounce, with prices still falling again from there.
"While the upside risks to gold pricing appear relatively limited," Goldman's update says, "we see a number of catalysts for gold prices to moderate, including a more hawkish Fed and ultimately US policy rate divergence [from the rest of the world], corresponding with gradual Dollar appreciation over the next 3-12 months."
Shorter-term, "the metal has been moving sideways," says the latest technical analysis from Russell Browne at Canada-based Scotiabank's New York office, advising that "only a break of resistance at $1303 (the recent high) or support (intact at $1256...next major level in the $1242-1245 area) will reverse my neutral view on gold."
Shareholdings in the giant SPDR Gold Trust (NYSEArca:GLD) – the world's largest exchange-traded gold product – rose again yesterday, needing 839 tonnes of gold backing, the largest quantity in 2.5 years.
"ETF inflows followed the move higher in the gold price in April," Bloomberg quotes Japanese conglomerate Mitsubishi's strategist Jonathan Butler.
"This upwards momentum has followed through into May despite gold [prices] coming off highs of the start of the month."