Gold’s record-breaking run ended with its worst single-day drop in 12 years, but demand remains strong due to inflation fears and global turmoil. Central banks are expected to continue buying gold, providing support for prices. Analysts at Lombard Odier highlight the solid supply-and-demand dynamics of gold despite recent volatility.

Spot gold prices fell to $4,140 per ounce from a record high of $4,381.21 per ounce. Prices have surged by as much as 60% as investors seek protection from inflation and geopolitical risks. Supply constraints and central bank demand are expected to keep prices supported.

Central banks are seen as a key stabilizing force for gold prices, creating a higher floor for the precious metal. Gold’s currency-like characteristics make it attractive for diversifying reserve holdings, especially amidst US government debt and uncertain fiscal policies.

Analysts predict that macroeconomic and geopolitical uncertainties will continue to drive central bank demand for gold. They have raised their 12-month price target for gold from $3,900 to $4,600 per ounce, citing ongoing global risks and increasing demand from institutions.

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