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Gold costs notched a new record on Monday for a second day in a row — with spot costs touching $2,100 as the worldwide rush for bullion seems set to proceed.
Gold costs are on the right track to hit recent highs subsequent yr and will stay above $2,000 ranges, analysts stated, citing geopolitical uncertainty, a probable weaker U.S. greenback and attainable rate of interest cuts.
Costs of the yellow metallic have risen for two consecutive months with the Israel-Palestinian conflict boosting demand for the safe-haven asset, whereas expectations of rate of interest cuts have supplied additional help. Gold tends to carry out effectively during times of financial and geopolitical uncertainty as a consequence of its standing as a dependable retailer of worth.
“The anticipated retreat in both the USD and interest rates across 2024 are key positive drivers for gold,” UOB’s Head of Markets Technique, International Economics and Markets Analysis, Heng Koon How, instructed CNBC by way of e mail. He estimated that gold costs may attain as much as $2,200 by the top of 2024.
Equally, one other analyst is bullish on bullion’s outlook.
“There is simply less leverage this time around vs 2011 in gold … taking prices through $2,100 and putting $2,200/oz in view,” stated Nicky Shiels, head of metals technique at valuable metals agency MKS PAMP.
All that glitters is gold
Spot gold costs rose to a brand new report excessive of $2,110.8 per ounce Monday earlier than giving up some positive factors. It’s at present buying and selling at $2,084.59.
On Friday, gold touched $2,075.09 to surpass a valuable intraday report excessive of $2,072.5 on Aug. 7, 2020, in keeping with LSEG information.
Bart Melek, head of commodity methods at TD Securities, expects gold costs to common $2,100 within the second quarter of 2024, with sturdy central financial institution purchases appearing as a key catalyst in boosting costs.
In keeping with a current survey by the World Gold Council, 24% of all central banks intend to increase their gold reserves within the subsequent 12 months, as they more and more develop pessimistic concerning the U.S. greenback as a reserve asset.
“This means potentially higher demand from the official sector in the years to come,” Melek stated.
A attainable coverage pivot by the Fed in 2024 is also on the playing cards, he added. Decrease rates of interest are inclined to weaken the greenback and a softer greenback makes gold cheaper for worldwide patrons thus driving up demand.
Gold costs prior to now six months
On Friday, whereas Fed Chairman Jerome Powell pushed back on expectations for aggressive interest rate cuts forward, his remarks indicated the Fed might not less than be completed mountain climbing for now.
“We believe the main factors buoying gold in 2024 will be interest rate cuts by the U.S. Fed, a weaker U.S. dollar and high levels of geopolitical tension,” BMI, a Fitch Options analysis unit, stated in a current notice.
