(Kitco News) – Despite a relatively slow start to the year, after hitting a record annual price in 2023, analysts see the potential for the precious metal to achieve another record this year, according to the latest survey from the London Bullion Market Association.
Member analysts of the LBMA see the gold market achieving a record annual price of $2,059 an ounce this year, an increase of 6.1% compared to $1,940.54 an ounce achieved last year.
“Comparing analysts’ forecasts against actual prices in the first 11 days of January 2024, which averaged $2,040.18, we can infer that analysts aren’t expecting runaway prices for gold this year,” the LBMA said in its report.
The survey shows analysts are relatively split on the main drivers for gold prices this year. According to the results, 25% expect U.S. monetary policy to be the most significant factor; at the same time, in a tie, 22% either expect central bank demand or geopolitical risk to drive prices.
Looking beyond the humdrum average forecast, there is solid bullish sentiment among analysts. The report noted that all analysts surveyed expect gold prices to hit new all-time highs this year.
The most bullish analyst was Chantelle Schieven, head of research at Capitalight Research. She said that she sees gold prices rising to $2,400 an ounce and averaging the year around $2,170 an ounce.
“Central banks, notably the US Federal Reserve, are expected to start lowering interest rates in coming months, and our expectation is that they will ease throughout 2024 and the US dollar is likely to continue to decline through 2024. Central bank demand for gold was at a record level in 2022-23. The days of gold being phased out of the international monetary system (1990-2008) are over! Dedollarisation, aided by fear of Western financial sanctions, are driving central banks back to the original reserve: gold,” she said in her estimate. “Gold could literally surge at any time on the back of any number of crises over the next several years.”
The most bearish analyst is James Steele, chief precious metals analyst at HSBC. He looks for gold to trade between $1,825 an ounce and $2,200 an ounce, with average prices settling the year around $1,947.
Analysts are slightly more upbeat on silver as the market could see significant volatility this year.
The survey said that analysts see silver prices averaging the year around $24.80 an ounce, 6.2% above the 2023 average price of $23.35. The average price is also 7% above the average in the first month of the new year.
“The 2024 average forecast of $24.80 suggests another reserved year of silver price gains. However, within this relatively sedate forecast, analysts are expecting some price volatility with their predicted trading range of $14 – between $18.00 and $32.00 – compared to the actual trading range of almost $6 last year,” the LBMA said.
The analyst with the most bullish silver outlook was Julia Du, precious metals analyst at ICBC Standard Bank. She sees silver trading between $20 and $30 and averaging the year around $27 an ounce.
“Projected Fed interest rate cuts may boost economic growth, increasing silver demand. The correlation with gold, especially when gold becomes expensive, is likely to elevate silver prices. Additionally, support from a weaker dollar due to expected lower rates and less dovish stances by the ECB and BOE could help silver to touch $30 in 2024,” Du said in her note.
The most bearish in the silver market was Debajit Saha, lead metals analyst at Refinitiv. He said he sees silver trading between $20.50 and $26.76 an ounce and averaging 2024 around $22.50 an ounce.
Gold and silver are expected to be the leaders in the precious metals space as analysts see slightly less potential in platinum and are outright bearish on palladium.
According to the survey, platinum is forecast to average $1,015, up 5.2% from last year’s average price of $952.88 an ounce.
“While the price expectations are relatively modest, the spread between the lowest low and the highest high is $529, suggesting some volatility ahead,” the LBMA said.
While Steele had the most bearish vote for gold, he was the most bullish on platinum; he sees prices trading between $875 and $1,329 with an annual average of around $1,105.
“Platinum is likely to trade in a wide volatile range this year. Auto demand should continue to rise sharply on increased substitution for more expensive palladium and the continued recovery in vehicle production globally, but we expect this to be partially offset by increases in auto recycling and EV sales. Jewellery demand is also likely to rise, but from low levels,” Steele said in his survey comments. “The outlook for other industrial demand sources appears positive as new applications for platinum grow, notably environmental and pollution control. We expect the structural market deficit of 2023 to continue at a similar level in 2024.”
Alexander Zumpfe, analyst at Heraeus Metals, cast the most bearish vote with an average platinum price of $950 an ounce.
Finally, analysts expect palladium to continue to suffer as prices remain in an overall downtrend. The analysts see prices averaging the year around $1,060.10 an ounce, down sharply from last year’s average price of $1,337.39 an ounce.
“On the positive side, analysts are forecasting a wide spread of price activity, with the lowest low forecast of $550 and the highest high forecast to be $1,650 – a range of $1,100. So it’s anyone’s to win amidst this level of price volatility,” the LBMA said.
Peter Fertig, market analyst at QCR Quantitative Commodity Research, was the most bullish on palladium as he sees prices trading between $900 and $1,650 an ounce with an annual average of $1,250 an ounce.
“With central banks lowering interest rates, new car sales are likely to recover. Thus, a stabilisation appears the most likely scenario, but in 2024, the average price is probably again lower compared to the previous year,” he said in his comments.
Ross Norman, creator of Metals Daily, submitted the most bearish forecast of $724.00 an ounce.
The analyst whose average price is closest to the actual average price in 2024 will win a 1oz gold bar.
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