Every year the LBMA in London publishes its Annual Precious Metals Forecast Survey. Of all the precious metals, they look most bullish on gold this year. All analysts see gold printing new highs, while silver is aligned with gold expectations, but with a forecast trading range of over double the actual range during 2023.
For gold investors, 2023 has been a year of strong price swings, leading to an all-time record high in early December. Many are now watching to see if 2024 will bring with it a strong rebound in the global economy and the end of ‘higher for longer’ interest rates. History tells us that rate cuts often favour non-yielding assets such as gold. However, the learning from recent years is that nothing is clear cut.
Top drivers for the gold price this year include US monetary policy, central bank activity and geopolitical risks, so no but surprises there.
Trust in the US dollar as well as its outright strength, or otherwise, is factored into these three main drivers. Other factors cited by the analysts included, in order of frequency, global interest rate trends, investor behaviour shifts, election de-stability, recession risks, ETF net redemptions, sensitivity of physical demand, US unemployment, and risks associated with small-medium banks and industries in the US and China.
Sentiment for gold price remains moderately positive
This year’s Forecast Survey reveals that sentiment for gold is moderately positive. The average 2024 forecast is $2,059 – a 6.1% increase on the average price for 2023, a year in which gold prices reached a record high of $2,078.40 per troy ounce on December 28, 2023 (PM auction).
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. Yet all expect gold to print new highs – in the price ranges submitted, gold’s forecasted highs extend from $2,100-$2,405.
Gold is forecast to trade between $1,781 (the lowest low) and $2,405 (the highest high) – a range of around $624 – during 2024.
Who is feeling bullish on the gold price in 2024?
The most bullish of the bulls is Chantelle Schieven of Capitalight Research with her average forecast of $2,170, who will be pinning her hopes on a lower US dollar and continued central bank gold demand bearing out. Representing the most bearish of the analysts is James Steel of HSBC with his average forecast of $1,947, a low of $1,825 and high of $2,200.
“The potential for central bank rate cuts in 2024 is boosting the gold and precious metals market, as the prospect of lower rates boosts demand for non-yielding assets,” said Stuart O’Reilly, a market analyst with The Royal Mint. “Traders and investors are increasingly pricing in a Fed rate cut some time in 2024, which could accelerate the price of gold alongside a weakening of the US dollar. The dual impact of this move could turbocharge gold beyond recent market highs, as recent geopolitical and economic uncertainty, alongside strong central bank gold buying, has kept precious metals markets elevated.”
2024 is also shaping up to be a record year for elections worldwide, with more people than in any other year having the opportunity to cast a ballot. With elections in the US, EU, India, Russia, South Africa and potentially the UK, we could see unexpected shifts in geopolitics.
“The lesson of recent years is that nothing is clear-cut, particularly in volatile markets, which remain unpredictable. Investors should consider how they are protected against this uncertainty and prepare their portfolio accordingly,” said O’Reilly.