Analysts Bullish on Gold and Silver Amid Rate Cutting Cycle and Geopolitical Tensions

Analysts are expecting gold to outperform in 2024.

J.P.Morgan forecasts gold and silver to outshine the rest of the metal sector, citing the Fed cutting cycle and falling U.S. real yields as the key drivers of gold prices in 2024, and anticipating the precious metal to reach an average of $2,175/oz by the fourth quarter. 

“Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing an entry will continue to be critical,” said Gregory Shearer of J.P. Morgan in its December market outlook. 

Other market participants share a similar view. 

“Once central banks stop tightening and start easing rates, which could be next year, gold will probably go higher,” says Bruce Liegel, a macro fund manager and author of the research newsletter Global Macro Playbook. “If we have a global recession, it will impact the amount of easing that the central banks will carry out. The more easing, the higher gold can go later next year and into 2025.”

The outlook for gold’s trajectory also hinges on the magnitude of the rate cut, contingent on whether there is a hard or soft landing in the economy.

“The future path of gold is probably higher, and it’s going to be determined by the degree of the landing,” says Liegel, who writes a monthly global macro report. “If it’s a hard landing, it will go up a lot more because the central banks will need to ease more. A soft landing means that less easing is required.”

Beyond the rate cutting cycle, geopolitical tensions are also being cited as a driver of gold prices for the medium term. 

As pointed out by a Morningstar report, “In an effort to gain more independence from the US dollar, EM central banks have stepped up their gold holdings substantially over the past two decades – in particular China and Russia.”

Read More: Institutionalization of Gold

Other central banks that have contributed to the gold buying surge include Poland, Turkey and India. Central bank demand, along with sustained investor interest, are expected to position gold favorably for continued strength in 2024. 

The World Gold Council estimated that excess central bank demand added 10% or more to gold’s performance in 2023, and central banks will likely continue buying in the coming year. “Even if 2024 does not reach the same highs as the previous two years, we anticipate that any above-trend buying (i.e. more than 450–500t) should provide an extra boost,” said the World Gold Council in its Gold Outlook report.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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