Gold price outlook

In 2023 gold prices have traded in a USD 1,800-2,000 per ounce range for most of the time. In periods of a stronger US dollar and higher US real yields gold prices moved towards the USD 1,800 level. Recently, gold prices have rallied to USD 2,000 again. The recovery in gold prices has happened against the background of lower US real yields, the possible end of the tightening cycles by the Fed and ECB and the situation in the Middle East (see above). Gold prices face difficulty to move and stay above USD 2,000 and/or to decline below USD 1,800.

For the coming months we don’t expect a change in these dynamics. However the start of the easing cycle and the large amount of rate cuts we expect for the Fed and the ECB in 2024 should be supportive for gold prices, especially as we expect more aggressive rate cuts by both central banks than the market. However, gold prices will probably only rally significantly if US real yields also move down and if markets don’t enter a prolonged period of severe risk off. If inflation and inflation expectations decline faster than the amount of rate cuts, real yields will increase and this will weigh on gold prices. Gold may have safe haven attributes, especially physical gold, but the dollar has the tendency to outperform in market panic due to superior market liquidity. Our forecast for the end of 2024 stands at USD 2,000 per ounce, with risks to the upside.