Gold prices could hit all-time highs next year on fears of a global recession and thanks to the end of a cycle of interest rate hikes by the world’s key central banks, analysts predict, with the most radical estimates calling for quotes to rise to $2500 an ounce.
“My target is $2500 by the end of 2024. This is largely due to the fact that recessionary factors could intensify towards the end of the year and gain strength in 2024,” wrote David Neuhauser, founder of Livermore Partners. – “I think gold will renew highs next year and go even higher.
“I’m pretty confident we’ll see gold at $2500 in the next couple years,” said Wheaton Precious Metals head Randy Smallwood, also pointing to recessionary signals as a positive for the precious metal.
The current quote record was set on August 7, 2020 at $2072.5 per troy ounce.
“I think gold will exceed the $2100 mark in late 2023 or early 2024,” said TD Securities managing director Bart Melek, adding that his forecast is based on the assumption that the Fed will take a pause in raising rates.
Gold has performed better than most other asset classes over the past 12 months, Melek pointed out. In his opinion, this shows the resilience of the precious metal in the face of rising interest rates and its value as a reliable asset that provides protection against inflation.
Quotes of December gold contracts on New York’s Comex exchange were up 0.1% to $1951 per troy ounce by 3:05 p.m. Q3:05 p.m. Friday.
In June, the world central banks returned to gold purchases and, according to preliminary estimates of the World Gold Council (WGC), purchased 55.4 tons of gold into the gold and foreign exchange reserves. For comparison: in May, according to revised data, there was an outflow of 26.6 tons.
In June, Turkey returned to purchases (increased its reserves by 11.4 tons), which supported the general trend. The largest buyer was China (21.2 tons), as well as Poland (13.7 tons), Uzbekistan (8.4 tons), Czech Republic (2.5 tons), Qatar (1.6 tons), etc. were buying gold for reserves.
Only Kazakhstan (3.2 tons) and Singapore (1 ton) turned out to be large net sellers.
Gold prices are rising on Tuesday amid a decline in the dollar and yields on U.S. government bonds on expectations of the publication of data on U.S. inflation.
Quotes of August gold contracts on the New York Comex exchange by 18:52 Q2 rose by 0.27% to $1936.2 per troy ounce.
New U.S. inflation data will be released on Wednesday. Analysts polled by Trading Economics on average forecast consumer price growth in the world’s largest economy slowed to 3.1% last month from 4% in May.
Core inflation (the CPI Core index, which excludes fuel and food prices), meanwhile, stood at 5.3% in May and is forecast to fall to 5% in June.
Ahead of the statistical release, the dollar index is down 0.1% and the yield on 10-year US Treasuries is down 1.5 basis points to 3.986%.
“We see government bond yields falling earlier in the week as investors wait for inflation to fall in June,” said StoneX analyst Fawad Razaqzada. – This has slightly boosted the comparative attractiveness of gold versus bonds.”
The world’s central banks, according to preliminary data, sold 27.4 tons of gold from international reserves in May 2023, the World Gold Council (WGC) estimated.
By comparison, sales totaled 69.4 tons in April, according to revised figures.
The largest state seller of gold in May was Turkey (62.8 tons). There were also reduced reserves in Uzbekistan (10.9 tons), Kazakhstan (2.4 tons) and Germany (1.8 tons).
They bought gold in reserves in Poland (19.9 tons), China (15.9 tons), Singapore (3.9 tons), Russia (3.1 tons), Iraq (2.3 tons), India (1.9 tons), the Czech Republic (1.8 tons) and Kyrgyzstan (1.5 tons).
Dynamics of gold and foreign reserves of Ukraine from 2012 to 2023
Source: Open4Business.com.ua and experts.news
Growing concerns about the U.S. government debt ceiling and expectations of interest rate cuts by the Federal Reserve will support gold, analysts at RBC Capital Markets believe.
As it was reported, the talks scheduled for Friday between Congressional leaders and President Joe Biden on the national debt were postponed by agreement of the parties. Meanwhile, U.S. House Speaker Kevin McCarthy said it “should not be construed” as a failure of negotiations.
“Even with the assumption that a deal will be reached sooner rather than later, we do not rule out the possibility of panic in the financial market as the deadline approaches,” wrote RBC Capital Markets strategist Christopher Looney. – We believe that gold is the best tool for hedging in the short term.”
In addition to the government debt situation and hopes that the Federal Reserve is nearing the end of its interest-rate hike cycle, demand for gold is supported by a number of other factors, said analysts at ANZ Banking Group Ltd. Soni Kumari and Daniel Hines. Among them are geopolitical risks, concerns about the state of the U.S. banking sector, as well as the slowdown in global economic growth.
Under the influence of these factors, gold-focused exchange-traded funds will see an inflow of funds by the end of the year, analysts believe ANZ.
Quotes for June gold contracts on the New York Comex exchange fell 0.33% to $2013.8 per troy ounce by 11:07 a.m. Since the beginning of the year, the price has risen by 8.2%.
