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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 target to hit contemporary highs subsequent yr and might stay above $2,000 ranges, analysts stated, citing geopolitical uncertainty, a possible weaker U.S. greenback and potential rate of interest cuts.
Prices 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 assist. Gold tends to carry out nicely during times of financial and geopolitical uncertainty due to its standing as a dependable retailer of worth.
“The anticipated retreat in each the USD and rates of interest throughout 2024 are key constructive drivers for gold,” UOB’s Head of Markets Strategy, Global Economics and Markets Research, Heng Koon How, advised CNBC through e-mail. He estimated that gold costs might attain up to $2,200 by the tip of 2024.
Similarly, one other analyst is bullish on bullion’s outlook.
“There is just much less leverage this time round vs 2011 in gold … taking costs by $2,100 and placing $2,200/oz in view,” stated Nicky Shiels, head of metals technique at treasured metals agency MKS PAMP.
All that glitters is gold
Spot gold costs rose to a new record excessive of $2,110.8 per ounce Monday earlier than giving up some features. It is at the moment buying and selling at $2,084.59.
On Friday, gold touched $2,075.09 to surpass a treasured intraday record excessive of $2,072.5 on Aug. 7, 2020, in accordance to 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 performing as a key catalyst in boosting costs.
According to a latest 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 in regards to the U.S. greenback as a reserve asset.
“This means probably greater demand from the official sector within the years to come,” Melek stated.
A potential coverage pivot by the Fed in 2024 is also on the playing cards, he added. Lower rates of interest have a tendency to weaken the greenback and a softer greenback makes gold cheaper for worldwide patrons thus driving up demand.
Gold costs within the past six months
On Friday, whereas Fed Chairman Jerome Powell pushed back on expectations for aggressive interest rate cuts forward, his remarks indicated the Fed could no less than be finished mountaineering for now.
“We imagine the primary components buoying gold in 2024 will likely be rate of interest cuts by the U.S. Fed, a weaker U.S. greenback and excessive ranges of geopolitical stress,” BMI, a Fitch Solutions analysis unit, stated in a latest word.