NBP increases gold reserves, anticipating further price increases

October was marked by continued increases in the price of gold. Silver joined the royal bullion rally, reaching a 12-month high, noting a local record at almost $35 per ounce. What is behind all this?

The simplest explanation is the US elections. The victory of Donald Trump could influence many things, including significant economic decisions. The importance of the United States in the global economy and financial system needs no further emphasis. The election of a new US president is a significant event, although it is highly likely that the uncertainty and tensions in the markets associated with the anticipation of the elections have brought more chaos and volatility than the results themselves will bring. We know that regardless of the election outcome, the United States will continue to borrow.

However, the gold price rally is driven by much more enduring factors – easing of monetary policy by central banks worldwide, geopolitical unease, demand from central banks or – increasingly significant – demand from gold-backed ETFs.

Gold price forecasts for 2025

Investment bank Goldman Sachs has raised its gold forecasts to 2900 USD by the end of 2025. Analysts from Incrementum AG look even further ahead. In their opinion, by 2030, the precious metal will cost already 4800 USD per ounce. What underlies such forecasts?

While many analysts compare the current situation to that of the late 70s, Ronnie Stoeferle, managing partner of Incrementum AG, took it a step further and analyzed a range of differences and similarities between the late 70s and early 80s and the present times. This is particularly relevant as gold was in a sideways trend lasting almost two decades after 1980.

It is a fact that – depending on the calculation method – although the price of gold is hitting new all-time highs (ATHs), it has only recently reached the level of gold prices in 1980, if we adjust it for inflation. However, as Stoeferle emphasizes, the method of calculating inflation has changed in the meantime, which somewhat distorts this analogy.

Nevertheless, the fundamental difference between the 70s and the current decade is the dynamics of the gold price increase. The contemporary gold bull market is much more uniform and lasting than that at the end of the 70s. Gold will continue to be aided and continue to be benefited by high demand from central banks, who seem to be ignoring the price, as well as the purchases of gold ETFs, which are only now beginning to buy the precious metal.

Easing of central bank monetary policy, which really began in September, is another factor that will feed gold for the coming years.

All these factors mean that, in Ronnie Stoeferle’s opinion, the analogy between the current times and the end of the 80s is misplaced. Fundamental factors also indicate potential for further increases, eventually to the level of 4800 USD per ounce in a 5-year perspective.

Inflation and interest rates in Poland

While many countries have already tamed inflation, or are well on their way to achieving it and are now embarking on monetary policy easing, Poland is a bit behind. In our country, inflation, although it was already on target, continues to rise. In this situation, it would seem logical to raise, rather than lower, interest rates.

The problem is that high interest rates are draining the portfolios of debtors, i.e., individual and institutional borrowers, as well as the state itself, which borrows money at high interest rates by issuing bonds.

That’s not the only problem. In a situation when everyone is lowering rates, and we are stubbornly sticking to our stance, the Polish zloty will strengthen more than desired by our exporters and our foreign partners, who will have to pay more for goods from Poland. This will impact the level of exports, and thus tariffs and taxes. Thus, we find ourselves in a difficult position where a move in either direction will bring both benefits and losses.

After recent gold purchases by the Polish National Bank, our reserves now amount to almost 420 tons, currently worth about 130 billion PLN.

Michał Tekliński, gold market expert Goldsaver.pl, Goldenmark Group