Gold prices are expected to dip in the near term before climbing to new highs later in the year, peaking at $2,300/ounce (oz) in 2025.
According to a report by JP Morgan Research, this would be driven by further interest rate cuts by the US Federal Reserve and falling US real yields
Following the first cut of the last three Fed cutting cycles in 2001, 2007 and 2019, gold prices have followed an upward trajectory.
The commodity soared to an all-time high of $2,135.39/oz at the end of 2023 after a powerful rally was sparked by central bank purchasing and mounting investor concern over the Israel–Hamas and Russia–Ukraine conflicts, the report said.
“Commodities are unlikely to benefit from core inflation in 2024. Inflation should fall to under 3%, so that, along with properly timing the business cycle, are the two conditions needed to initiate long positions, making the outlook for the sector very tactical in 2024,” said Natasha Kaneva, Head of Global Commodities Strategy at JP Morgan.
“Across commodities, for the second consecutive year, the only structural bullish call we hold is for gold and silver.”
Economic and geopolitical uncertainty tend to be positive drivers for gold, which is widely seen as a safe-haven asset due to its ability to remain a reliable store of value.
“It has low correlation with other asset classes, so can act as insurance during falling markets and times of geopolitical stress.”
(Writing by Brinda Darasha; editing by Seban Scaria)