Gold prices are likely to climb this year on the back of strong demand from central banks and retail consumers in the emerging markets, according to Goldman Sachs Research.

The precious metal could climb around 6% in the next 12 months to $2,175 a troy ounce, Nicholas Snowdon, Head of Metals in Commodities Research, and Lavinia Forcellese, an analyst, wrote in the report.

They said that prices could trade in a range in the near term amid uncertainty about the US Federal Reserve’s policy on interest rates.

Gold was trading at $2,036.19 an ounce as of Friday, GMT +01:00.

Central bank purchases have recently intensified amid rising geopolitical tensions.

Between 2022 and 2023, central banks purchased an average of 1,060 tonnes of gold, compared with 509 tonnes bought between 2016 and 2019.

“We expect central bank purchases will remain strong on the back of reserve diversification by [emerging market] countries and elevated geopolitical tensions,” the analysts wrote.

(Writing by Cleofe Maceda; editing by Seban Scaria)