Did you catch our mid-week update? If you missed it, you will also have missed the news that gold prices hit a key milestone, with prices soaring past the important £1,597 ($2,000) marker. You’ll also have missed the fact that more is certain to come – earlier this week, the Canadian investment bank TD Securities doubled down on its support for gold, with analysts saying they expect the precious metal to perform strongly in 2024.
With a recession expected to hit the world’s largest economy in the first six months, the bank’s senior commodity strategist, Daniel Ghali expects gold to perform exceptionally well, saying “We’re looking at gold prices rallying towards £1,675 ($2,100) an ounce on an average quarterly basis. On a more tactical horizon, that can overshoot quite substantially.”
Now, Société Générale has backed up that sentiment and reaffirmed its bullish stance. It goes even further than TD Securities in its average price estimate. In a new briefing note, Société Générale analysts have identified a series of critical supporting factors which they say will see the yellow metal safely ensconced around £1,753 ($2,200) early in 2024.
The bank believes a more volatile bond market, an end to Federal Reserve rate increases, high central bank demand and the prospect of recession all play to the bulls’ favour.
In particular, the increasing volatility in the bond market could prove to be a boon for gold prices as it creates a more attractive investment scenario for the yellow metal. “When treasuries experience the level of volatility that they are experiencing today, the value of future cash flows attached to a coupon strip over a non-interest-bearing asset like gold diminishes,” the bank explains. This makes gold more attractive and reduces the tail wind a strong bond market can have for gold.
Another major factor set to push prices higher and free the bulls for a run to all-time highs is the threat of recession. This is a double whammy for gold, with a recession itself a supporting factor – but this boost is compounded by the fact that a sluggish economy will force the Feds to hit pause on its rate hikes activity.
Finally, we can expect gold prices to continue at pace thanks to central bank buying, which hasn’t yet shown any signs of slowing down 12 months after the buying spree kicked off. “We expect continued central bank gold purchases in an attempt to diversify their reserve base to remain a long-term supporting driver for gold,” the bank’s analysts say. Significantly, they also suggest that the impact on prices will be felt far beyond its 2024 forecast window, creating a long-term source of support for the bulls.
It’s very clear that the bulls are gearing up for a sustained rally with numerous supporting factors helping to build momentum. You can’t afford to sit back and wait for those prices increases to kick in before making your move. Don’t delay. Buy gold now to position yourself for success in 2024.
