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What they say about gold

06.12.2023

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CNBS analysts from a major American financial news channel predict very strong demand for gold. Usually, when such judgments and forecasts are poured into the masses, everything happens exactly the opposite. BUT! There are compelling arguments and a very likely scenario here.

“The expected weakening of the US dollar and interest rates in 2024 is a key positive driver for gold,” Heng Koon Hou, head of market strategy, global economics and market research at UOB, told CNBC. He estimates that by the end of 2024, gold prices could reach $2,200 per ounce.

Similarly, another analyst is bullish on bullion’s prospects.

“There is simply less leverage this time compared to 2011 in gold. The price will rise to $2,100 and target $2,200 an ounce,” said Nicky Shiels, head of metals strategy at MKS PAMP.

According to a recent World Gold Council survey, 24% of all central banks intend to increase their gold reserves in the next 12 months as they become increasingly pessimistic about the US dollar as a reserve asset. “This means potentially stronger demand from the official sector in the coming years,” said Bart Melek, head of commodity strategy at TD Securities. He added that a possible policy reversal by the Federal Reserve in 2024 could also be imminent. Lower interest rates tend to weaken the dollar, and a weaker dollar makes gold cheaper for international buyers, thereby increasing demand.

Judging by the current state of the asset, there is a clear upward trend with the unloading of buy positions around $2,150 per ounce. It is likely that this is a long-term forecast. Now the price is consolidating around $2,000, but if the American labor market resumes its growth at the reports this Friday, then most likely it will not be entirely justified and will not be supported by the events described by analysts above.