By
Godfrey Benjamin
March 15th, 2024
Analysts and stakeholders expect gold prices to rise as the year runs out because of macroeconomic factors and recession risks.
There is a general bullishness around gold prices as the yellow metal is on course to an all-time high in 2024. Analysts believe that the new record is likely because of economic uncertainty which indicates a possible recession, and a potential reduction in interest rates.
According to TD Securities’ managing director and global head of commodity strategy Bart Melek, gold will likely hit $2,100 as 2023 ends or early in 2024. Melek believes that a softened stance towards continuously increasing interest rates would be bullish for the yellow metal. Melek is also bullish because gold has performed better than most other assets over the last 12 months.
Generally, many people consider gold a safe haven asset and are likely to buy more in times of economic instability. According to a CME Group report, gold performed about 37% better than the S&P 500 in six of the last eight recessions. This suggests that gold is likely to soar higher in the event of an official recession.
Another stakeholder believes gold will hit $2,500 in a “couple of years”. According to Randy Smallwood, the CEO of Canadian company Wheaten Precious Metals, a recession would be good for gold. Smallwood is bullish because he expects some drawbacks in the economies of both the US and China.
More bullish predictions continue to pour in for gold. One indicator of a rise in spot prices is the inverse relationship between gold and interest rates. When interest rates increase, people tend to move away from gold to other more attractive investment assets like bonds. This eventually reduces the demand for gold.
Gold is trading at $1,916 as of writing time.
More Predictions for Gold Prices
Singaporean banking giant UOB is also bullish on gold prices. According to the head of markets strategy, global economics, and markets research, Heng Koon How, the Fed will likely stop increasing interest rates soon:
“Key driver in our positive outlook for gold is anticipated peak in Fed rate hiking cycle as well as upcoming topping out of US Dollar strength.”
The UOB exec also predicted higher prices and that a strong demand for gold would come as people regain their economic spending power. He said:
“We also see a return of physical gold jewelry demand from China and India as both economies stabilize and retail spending returns.”
In a recent report, Citi noted that retail demand for gold from China has been buoyant especially compared to other goods. According to Citi’s head of commodities strategy Aakash Doshi in a report, gold demand from China was only slightly lower than 200 tons. Doshi notes that this the “strongest seasonal” seen since 2015. The report expects the demand to hit 700 tons by the end of the year. This project would confirm a 22% increase year on year.
Wheaton CEO Smallwood also stated that there is an increase in demand. According to him, customers are getting more gold in all forms, including coins, jewelry, and bars.