Wells Fargo highlighted the impressive performance of gold in 2024, which is currently holding near record highs.

The bank points out gold's year-to-date gain in USD, outperforming the broader commodity market. Strong global demand, central bank buying, and geopolitical tensions are cited by Wells Fargo as key drivers behind this surge.

"Gold's rally has been so strong that our 2024 target range of $2,300 – $2400 has now been hit, and our 2025 target range of $2400 – $2500 is only 5% higher," said the bank.

While Wells Fargo maintains their bullish stance on gold's fundamentals, they see a potential near-term pullback or stagnation due to a key factor: currency exchange rates.

"Investors have increasingly been asking us what we think of gold now. We continue to like gold and believe that its main fundamental drivers are intact," adds Wells Fargo. "That said, we suspect that gold may be due for a short-term pullback or, at best, may be range-bound over the next few months."

"Gold becoming pricey for many around the globe" is how Wells Fargo describes the situation. Since gold is traded globally in USD, a strengthening dollar makes it more expensive for buyers using weaker currencies. The bank says this explains the significantly stronger rally in gold priced in currencies like the Japanese Yen (up 26% year-to-date) compared to USD.

Despite the potential short-term stall, Wells Fargo reiterates their positive long-term view on gold. They believe a price range of $2,300 – $2,400 per troy ounce for 2024 and $2,400 - $2,500 for 2025 remains valid.