Will it touch $2500 per ounce? Foreign media: Global gold prices are expected to rise to historic highs in 2024 | Foreign media

According to an article published by American financial media CNBC on Thursday, global gold prices are expected to reach historic highs in 2024 due to continuously declining interest rates and heightened concerns about economic recession, which have elevated gold's position as a safe haven asset.

The media quoted some market analysts as predicting that spot gold prices may touch or even exceed the intraday high of $2072.5 per ounce set in August 2020, and are expected to reach $2500 per ounce by 2024.

Interest rates are falling, gold is in high demand?

As is well known, gold, as a safe haven asset, is closely related to factors such as geopolitical situation, interest rate fluctuations, inflation, and supply-demand relationships.

Specifically, when geopolitical tensions arise, gold is often seen as a safe haven; When interest rates rise, people's demand for gold decreases because alternative investments such as bonds become more attractive and yield higher returns; When inflation rises, people will seek to hold physical assets, and gold will be relatively popular... It should be noted that these factors often interact to determine the price of gold.

In recent years, global gold prices have experienced a period of volatility. After the outbreak of the Ukrainian crisis in February 2022, gold prices soared to a high of $2069 per ounce, and then gradually fell back to nearly $1600 per ounce in September 2022.

In March of this year, after the collapse of Silicon Valley banks in the United States, gold prices rebounded strongly, breaking through the $2000/ounce mark and reaching its peak. However, shortly after, it once again "lost its luster" and hovered around the $1925/ounce line. The international gold price on August 11th was $1915.33 per ounce.

Although gold prices are still hovering below $2000 per ounce, several analysts interviewed by CNBC are optimistic about its upward trend, believing that gold prices may break the intraday record set in August 2020.

"I do believe that gold prices will break through $2100 per ounce by the end of 2023 and early 2024," said Merrick, Global Commodity Strategy Director at leading securities firm Dominic Securities in North America. He attributed the optimism to the possibility of the Federal Reserve's tightening cycle pausing.

At the end of last month, the Federal Reserve raised interest rates for the 11th time since March last year, with a cumulative increase of 525 basis points to curb high inflation. Many economists believe that July's interest rate hike is the last time the Federal Reserve will raise interest rates in this cycle.

"I am optimistic about gold because I believe the Federal Reserve will change its current restrictive policy model. I believe this will happen before the 2% inflation target is reached," said Merrick.

Worried about recession, singing high on gold prices

In addition to bullish gold prices due to the possibility of the Federal Reserve suspending its tightening cycle, some analysts are also optimistic about gold due to concerns about a global economic recession.

Founder of Livermore Partners, a hedge fund in the United States, predicts that gold prices will reach $2500 per ounce by the end of 2024. This is more than 26% higher than the current gold price.

"This is largely related to the fact that the forces of economic recession may begin to dominate later this year and intensify in 2024," Noihauser said.

This analyst predicts that as inflation rates fall between 3% and 5%, the global economy will continue to stagnate in the coming years. During periods of economic uncertainty such as recession and stagflation, gold often performs well as a reliable hedging tool.

The CEO of Wharton Precious Metals, headquartered in Vancouver, also expressed great confidence in seeing gold prices rise to $2500 per ounce in the coming years. "Any type of recession will benefit gold."

Dahua Bank predicts that gold prices will set a new record, but it will not be until the second half of 2024. The time when gold prices rise to $2100 per ounce may occur in the second quarter of 2024.

The pace of purchasing gold remains strong

In addition, market analysts point out that central banks around the world generally believe that the prospect of increasing gold as a reserve asset is slightly better than last year, and the upward cycle of gold prices has not ended. Maintaining the pace of gold purchases is the trend.

Wang Junhao, the head of market strategy at Dahua Bank, believes that with consumer demand for gold, the central bank's purchases of gold have remained "strong". He stated that as the economies of China and India stabilize and retail spending rebounds, the demand for physical gold and jewelry in both countries has also rebounded.

Citibank stated in a July report that retail gold demand in China will remain resilient in 2023. The commodity strategist at the bank stated that the demand for gold and jewelry in China in the first quarter was "close to 200 tons, the strongest quarter since 2015". The bank also expects that China's jewelry demand will exceed 700 tons this year, a year-on-year increase of 22%.

Hill's, head of metal strategy at precious metal trading company MKS PAMP, stated that physical gold demand in some regions has recovered, and central bank gold demand remains strong. She pointed out that emerging market central banks continue to de dollarize and use gold as an alternative option in the face of further Western sanctions. According to reports, the BRICS countries are considering transitioning from the US dollar to a new currency supported by gold.

However, while some people are bullish on gold prices, there are also reminders that given the current complex and ever-changing international political and economic situation, the trajectory of gold prices may be uncertain.

The Chicago Stock Exchange Group believes that the prospects of gold prices rising and falling will be relatively balanced - if the US dollar weakens, it may provide support for gold prices; But if the US and global economy continue to show resilience, or if the US avoids recession, then the upward momentum of gold prices will be insufficient.

Market insiders suggest that gold investors should consider investment ratios in a balanced manner, especially when considering "chasing high", they should be more cautious and make prudent decisions.