Mining
Monday, December 4th, 2023 3:26 pm EDT
Key Points
- Record-Breaking Gold Prices: Gold prices achieved a new record high of $2,100 on consecutive days, reflecting a global surge in demand for bullion. The article suggests that this trend is likely to persist, with spot prices touching $2,110.8 per ounce.
- Factors Driving Gold’s Outlook: Analysts anticipate that gold prices will continue to rise in the coming year, potentially remaining above $2,000. The key drivers mentioned include geopolitical uncertainty, the likelihood of a weaker U.S. dollar, and the possibility of interest rate cuts. The Israel-Palestinian conflict and expectations of lower interest rates have contributed to the recent increase in gold prices.
- Analyst Projections and Catalysts: Analysts, including Heng Koon How and Nicky Shiels, express optimism about gold’s future. Koon How identifies the anticipated retreat of the U.S. dollar and interest rates in 2024 as positive drivers, estimating that gold prices could reach $2,200 by the end of that year. Shiels emphasizes that there is less leverage in the gold market compared to 2011, envisioning prices surpassing $2,100 and potentially reaching $2,200 per ounce. Additionally, Bart Melek expects gold prices to average $2,100 in Q2 2024, citing strong central bank purchases as a catalyst. The article also notes a survey indicating that 24% of central banks plan to increase their gold reserves in the next 12 months, potentially driving higher demand.
Gold prices reached a new record for the second consecutive day, hitting $2,100 in response to a global surge in demand for bullion. Analysts predict that this upward trend will continue into the next year, with prices potentially staying above $2,000. The driving factors include geopolitical uncertainties, expectations of a weaker U.S. dollar, and possible interest rate cuts. The Israel-Palestinian conflict has contributed to the increased demand for gold, as it is perceived as a safe-haven asset during times of economic and geopolitical uncertainty.
Analysts, such as Heng Koon How, UOB’s Head of Markets Strategy, Global Economics and Markets Research, anticipate a retreat in both the U.S. dollar and interest rates throughout 2024, which could positively impact gold prices. Koon How estimates that gold prices could reach up to $2,200 by the end of 2024. Nicky Shiels, head of metals strategy at MKS PAMP, is also optimistic about gold’s outlook, noting that there is less leverage compared to 2011, making $2,200 per ounce a realistic target.
Spot gold prices hit a new record high of $2,110.8 per ounce, subsequently trading at $2,084.59. This follows the previous record of $2,075.09 reached on Friday, surpassing the intraday record high of $2,072.5 set on August 7, 2020. Bart Melek, head of commodity strategies at TD Securities, expects gold prices to average $2,100 in the second quarter of 2024. Central bank purchases are identified as a key catalyst for boosting prices, with a survey by the World Gold Council indicating that 24% of central banks plan to increase their gold reserves in the next year.
The potential for a policy pivot by the Federal Reserve in 2024 is discussed, with lower interest rates expected to weaken the dollar. A softer dollar makes gold more affordable for international buyers, increasing demand. The Fed’s series of rate hikes starting in March 2022, driven by rising inflation, initially diminished gold’s appeal. However, the possibility of easing policy, particularly if inflation data improves, has led analysts to anticipate a spike in gold prices.
While Fed Chairman Jerome Powell pushed back on expectations for aggressive interest rate cuts, his remarks suggest that the Fed may at least be done hiking rates for the time being. BMI, a Fitch Solutions research unit, highlights the main factors expected to buoy gold in 2024: interest rate cuts by the U.S. Fed, a weaker U.S. dollar, and high levels of geopolitical tension. Overall, the article underscores the multifaceted factors contributing to the bullish outlook for gold prices in the coming year.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/04/gold-prices-set-for-new-highs-amid-economic-geopolitical-uncertainty.html
