In light of ongoing central bank purchases and geopolitical unrest, the World Gold Council predicts that demand for gold will be strong in 2024 despite the metal hitting yet another record high this week.
Early on Friday, spot prices for the yellow metal were circling about $2,030 per ounce, having broken past $2,100 per ounce on Monday before somewhat cooling off.
Many analysts now predict a “soft landing” in the United States, where the Federal Reserve brings inflation down to target without starting a recession. This would be good for the world economy, according to the World Gold Council’s Gold Outlook 2024 study, which was released on Thursday.
“Not especially appealing for gold, resulting in flat to slightly negative average returns,” according to the industry association that represents gold mining businesses.
But each cycle is unique, anyway. This time, elevated geopolitical concerns in major economies’ election years, along with ongoing central bank purchases, may give gold further support, the WGC continued.
A worldwide recession is still a possibility, according to its strategists, who also stated that a gentle landing is “by no means assured.”
The WGC continued, “This should motivate many investors to include gold and other good hedges in their portfolios.”
According to the WGC, the breakdown of Silicon Valley Bank and the Hamas attack on Israel were the two biggest events for the demand for gold in 2023. The WGC estimated that geopolitical events raised the price of gold by 3% to 6% during the course of the year.
Forecasting for 2024, the paper stated that investors’ need for portfolio hedges would likely be stronger than usual in a year with significant elections occurring throughout the world, particularly in the U.S., the EU, India, and Taiwan.
Source (CNBC)
