One of the hallmarks of strength is how well an asset performs in the face of headwinds – in the case of gold, that performance is stellar, so says Saxo Bank. The Danish investment bank has this week underlined its support for the yellow metal, pointing out the relative strength of the asset despite tricky trading conditions in February.
As we move into the final month of the first quarter, the bank’s head of commodity strategy Ole Hansen has issued a trading note which highlights the strength and resilience of gold as markets tread water waiting for the Federal Reserve to announce rate cuts.
He said, “Despite the rising ‘cost’ of holding a non-interest paying gold position and the market’s current obsession with AI-related stocks and cryptos, the yellow metal has done well amid underlying demand for physical gold as well as the softer dollar.”
Saxo continues to be heavily bullish in its price predictions for gold. Its forecast of £1,820 (+12%) for 2024 remains unchanged, with the expectation that we will see several price records set in the remaining three quarters of the year.
The Danish bank expects that we will see some price turbulence over the next few weeks and months while the Fed continues to drag its heels of loosening its policy direction. Hansen adds, “We keep a bullish outlook for gold… but as we have highlighted on several occasions in recent months… Until the first cut is delivered, the market may at times run ahead of itself, in the process building up rate cut expectations to levels that leave prices vulnerable to a correction. With that in mind, the short-term direction of gold … will continue to be dictated by incoming economic data and their impact on the dollar, yields and not least, rate cut expectations.”
This expected movement up and down is great news if you’re on the ball as it means that you can expect some strong opportunities to buy at a favourable price point during the dips. Make no mistake, gold continues to set an upward trajectory. You can’t afford not to have the precious metal in your portfolio.
Buy now before prices run sky high.
