As we enter the second half of 2024, analysts’ forecasts for gold prices have become increasingly optimistic, with many predicting that gold prices could hit new record highs by mid-2025. This bullish outlook is driven by a combination of factors, including central bank purchases, investor demand, and macroeconomic conditions.
**Strong Physical Demand**
Citi analysts have observed a slight softening in physical gold demand in the second quarter of 2024 compared to the first quarter. Despite this, they believe that the underlying growth in gold consumption remains robust. This could lead to spot prices reaching a record average range of $2,400-$2,600 per ounce in the latter half of the year. Additionally, a decrease in non-monetary gold imports into China may also impact XAU/USD. Furthermore, central bank gold purchases are expected to remain strong, potentially reaching record levels in 2024.
*Additional Insight:* The ongoing strong physical demand for gold indicates a continued interest in the metal as a safe haven asset and a store of value in uncertain times.
**Central Bank Activities**
The People’s Bank of China paused its gold purchases in June 2024 after a period of consistent buying. However, other central banks like the Reserve Bank of India, the National Bank of Poland, and the Czech National Bank continued to acquire gold, contributing to market stabilization. The overall sentiment remains bullish due to other central banks’ continued interest in gold buying.
*Additional Insight:* Central banks’ actions play a significant role in influencing gold prices and market sentiment, as they are seen as strategic buyers in the precious metals market.
**Gold Prices: Future Projections and Outlook**
Bank of America analysts have forecasted a surge in gold prices to $3,000 per ounce within the next 12-18 months. While current market flows do not fully support this price point yet, factors like increased non-commercial demand and ongoing central bank purchases could drive prices higher. BofA’s model takes into account various factors affecting gold prices, with potential for a substantial increase in investment demand pushing prices closer to $3,000.
*Additional Insight:* The potential for gold prices to reach $3,000 highlights the confidence in gold as a valuable asset for investors seeking protection against economic uncertainties and inflation.
**A Bullish Year Ahead for Gold**
Overall, the outlook for gold in 2024 appears bullish, supported by strong physical demand, ongoing central bank purchases, and potential shifts in monetary policy. While short-term fluctuations are expected, the long-term trend suggests higher gold prices. Critical factors like sustained central bank buying and increased investment demand could drive prices up, making gold a valuable asset in uncertain times.
*Additional Insight:* The combination of strong fundamentals and external factors like inflation expectations and geopolitical risks will continue to shape the trajectory of the gold market, signaling a positive outlook for gold in the foreseeable future.
