A market strategist said that the signal from the Federal Reserve that interest rates will be lowered in 2024 has created some healthy momentum for the gold market, which will lead to gold prices reaching historic highs in the new year.
George Milling Stanley, Chief Gold Strategist at Dow Jones Global Investment Consulting, said that although gold prices have recently peaked, there is still a lot of room for market growth.
He said, "When gold finds momentum, no one knows how high it will rise, and next year we are likely to see a historic high."
Although Milling Stanley is optimistic about gold, he added that he does not expect gold prices to break through in the short term. He pointed out that although the Federal Reserve hopes to cut interest rates next year, the question remains when to pull the trigger. He added that in the short term, timing issues should keep gold prices within the current range.
In Dow Jones' official forecast, Milling Stanley's team believes that there is a 50% chance of gold trading between $1950 and $2200 per ounce next year. At the same time, the company believes that the probability of gold trading between $2200 and $2400 per ounce is 30%. Dao Fu believes that the possibility of gold trading between $1800 and $1950 per ounce is only 20%.
Milling Stanley stated that the health of the economy will determine how high the price of gold will go.
He said, "My feeling is that we will be going through a period of growth below trend, possibly an economic recession. But along with it, according to the Fed's preferred metrics, there may still be sticky inflation. This will be a good environment for gold." "If there is a severe economic recession, then our bullish reasons will come into play."
Although it is expected that the potential upward potential of gold will attract new strategic investors, Milling Stanley stated that the long-term support of gold indicates that the upward momentum of gold prices will continue in 2024.
He said that the two ongoing conflicts will maintain safe haven buying for gold. He added that an uncertain and "ugly" election year will also increase the safe haven appeal of gold. He also stated that the growing demand from India and other emerging markets will provide support for physical gold.
Further purchases of gold by central banks of various countries will exacerbate the new model shift in the market.
He said, "It makes sense to take profits when gold prices exceed $2000 per ounce in the past five years, and I think that's partly why gold prices may occasionally fall below $2000 next year. But at some point, I still believe that gold prices will stand firm above $2000." "For 14 years, the central bank has consistently purchased 10% to 20% of annual demand. Whenever there are signs of weakness in gold prices, this is huge support, and I expect this trend to continue for many more years."
Milling Stanley stated that he expects any significant sell-off of gold to be bought relatively quickly in the face of global economic uncertainty and geopolitical turmoil.
He said, "From a historical perspective, gold's commitment to investors has always had a dual nature. Over time, not every year, but over time, gold can help increase the returns of an appropriately balanced investment portfolio. At any time, gold will reduce risk and volatility in an appropriately balanced investment portfolio." "I expect this dual commitment of return and protection to attract new investors in 2024."