Gold prices have been hitting record highs in Q1’2024
The rally in gold persists, with prices reaching an all-time high on Thursday. There’s potential for further increases as central banks continue to acquire bullion at record levels.
Aakash Doshi, Citi’s North America head of commodities research, suggests that prices could climb to $2,300 per ounce in the latter half of 2024. This optimism stems from expectations of a rate cut by the U.S. Federal Reserve during that period. Currently, gold is trading at $2,203.
Gold prices typically move inversely to interest rates. As rates decline, gold becomes more attractive compared to fixed-income assets like bonds, which offer weaker returns in low-rate environments.
Macquarie also anticipates new highs for gold prices in the latter part of the year. They attribute the recent $100 spike in prices to significant futures buying.
Shaokai Fan, Global Head of Central Banks at the World Gold Council, notes that central banks’ substantial purchases over the past two years have buoyed gold prices in 2024. This trend persists despite high interest rates and a strong dollar.
The appeal of gold as a safe-haven asset amid geopolitical uncertainties fuels strong physical demand.
Doshi mentions that China and Russia have been the largest buyers in the past decade, but recent central bank purchases have diversified.
China’s central bank remains the top buyer, driven by its weak economy and uncertainties in the real estate sector. Poland and Singapore have also significantly increased their gold reserves, motivated by stability concerns and geopolitical risks.
Retail purchases of jewelry, bars, and coins have also contributed to the strength of gold prices. China led in both central bank and retail purchases, with robust demand driven by diversification from other asset classes.
Despite being one of the world’s largest consumers of gold, India saw a slight decrease in jewelry demand due to higher prices. However, investment in gold bars and coins increased, along with strong central bank purchases.
Turkey’s gold demand nearly doubled in 2023 due to factors such as persistent consumer inflation, limited alternative investments, and domestic political uncertainty.
Overall, the outlook remains positive for gold prices, fueled by central bank purchases, geopolitical concerns, and retail demand.
Disclaimer: This article is for informational purposes only and does not constitute any professional advice. Feel free to contact us to consult with our professional advisors team for personalized advice and guidance.
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