Investing.com – After gold’s recent rise to record levels, is sentiment still bullish enough to push it further?
Some analysts believe that gold still offers a great opportunity.
Gold prices today
Gold prices rose to record levels earlier this week, benefiting from changing expectations surrounding US price cuts as well as increased safe-haven demand.
Ongoing geopolitical tensions in the Middle East and between Russia and Ukraine, coupled with the devastating earthquake in Taiwan, have spurred the safe-haven rise of bullion and other precious metals.
Gold received further support thanks to sharp declines in the dollar, with the US currency falling to its lowest level in a week, as Federal Reserve officials confirmed that the central bank is likely to cut interest rates in 2024, although they gave little indications about the possible timing. To lower interest rates.
“It has generally responded positively to improved prospects for the Fed shifting from tightening to pausing/easing,” Imaro Casanova, portfolio manager of gold and precious metals strategies at Sundof Van Eck, said in a note.
“Historically, gold has performed well during periods of high inflation. If inflation and inflation expectations remain above the Fed’s target, we believe this will be positive for gold.
Another factor supporting the yellow metal over the longer term is record buying from the official sector, with demand from central banks representing more than 20% of total gold demand for 2023.
At 09.05 EST (14.05 GMT), spot gold was trading at $2,292.19 an ounce, just below the record high of $2,302.58 an ounce. That expires in June was trading at $2,312.15, after hitting a record high of $2,322.25 an ounce earlier this week.
Gold price forecast 2024
Further gains appear likely, as Casanova sees the potential for gold to rise above 2,500 an ounce.
“In recent years, rallies of this type have often been followed by periods of consolidation around a stable upper level, with the metal trading in a sideways pattern until a new catalyst emerges that pushes prices higher,” he added.
“A return in investment demand, as evidenced by flows into global bullion ETFs, could be that catalyst, with the potential to push gold higher.”
Analysts at Bank of America (NYSE:) Securities largely agreed with that forecast, sticking to a price estimate of $2,400 an ounce this year.
“Our fundamental forecast for next year for 2024 calls for the first green in 2024 to be gold. A bull flag pattern has been confirmed in late October 2023 which estimates a climb to $2,145 and possibly $2,360,” Bank of America said.
Bank of America noted that the long-standing positive correlation between gold prices and physically backed exchange-traded funds has broken down, with assets under management in these instruments declining.
However, “in our view, this is strongly influenced by ongoing concerns about the direction of monetary policy. However, if the Fed eventually starts cutting interest rates, investors should return to the market.”
In addition, the central bank’s net purchases of 1,037 tons of gold in 2023 are more than double the pre-2022 average annual net purchases of about 500 tons of gold per year.
“This is an impressive trend, which is expected to continue over the long term,” Casanova added.
In exchange for gold
Gold is considered a safe investment, protecting against inflation, geopolitical and financial risks while promoting portfolio diversification. Bitcoin, which is still in its early stages, appears to be able to offer some of these same advantages.
“However, it is clear that the one thing that Bitcoin currently lacks is the proven track record that gold has established over centuries as the asset of choice for investors around the world,” Casanova said.
How to invest in gold
The most common way to invest in physical gold is to purchase gold bullion, which is usually in the form of bars, bars or coins.
However, there are usually additional costs to owning gold in this way, mostly in the form of safe storage – many investors keep their gold bullion in safety deposit boxes or bank vaults, rather than at home.
A gold exchange-traded fund (ETF) allows you to invest in gold, without having to purchase physical gold assets. Some gold ETFs simply track the price movements of physical gold, while others may include shares in gold mining companies, or various gold-backed derivatives. They can be traded like stocks, making them liquid and easy to sell when needed.
A gold unit fund is also a fund consisting of gold-linked assets and derivatives, but is more actively managed.
Learn more about the best gold ETFs
Gold, often viewed as a safe-haven asset, acts as a hedge against inflation, currency fluctuations and geopolitical uncertainties.. Provides investment in gold exchange-traded funds (ETFs) A convenient way to gain exposure to this precious metal without the complications of physical ownership.
2024-04-05 12:07:00
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