Bloomberg has substantially increased its gold price forecast for 2024, with senior commodity strategist, Mike McGlone calling for £2,374 ($3,000) within the next 12 months.
McGlone cites numerous factors as being highly supportive of gold, but one of the key drivers is the prospect of recession. “Most central banks were tightening in 3Q, which may indicate the full effects won’t be felt until 3Q24, with bullish gold implications. Debt typically rises vs. GDP and precious metals outperform industrials in US recessions. Advancing gold vs. most commodities in 2023 could be a sign of what’s to come when the effects of aggressive 2022-23 rate hikes take effect.
“At about a 50% discount to the S&P 500, the per-ounce price of gold is ripe to revert higher, if US unemployment continues to rise,” he added. “Since the US ditched the gold standard in 1971, when the metal was below the stock index and unemployment rose, gold typically outperformed. If equity prices have a normal recession drawdown, it might be a catalyst for gold to rally.”
ETF outflows are also smaller than what has been the case historically, further boosting gold while declining oil and energy prices will further buoy the bulls.
“Base case for a great reset is guided by the lessons of history, economics, and big liquidity pumps that dump,” McGlone concludes. “The year 2025 may be marked by a lower plateau in risk assets and underpinnings from central bank easing. The down leg of a typical commodity cycle and the Fed still focused on higher for longer might tilt 2024 outperformance toward gold.”
Don’t wait for £2,374 ($3,000) gold. Buy now.
