(Kitco News) – Reviewing the performance of the precious metals sector in the first quarter of 2024, MKS Pamp has updated their outlook for the remainder of the year. After realizing they were not bullish enough on gold, the analysts have adjusted their forecasts for gold, silver, and platinum. They believe that the relative outperformance between gold and the white metals (silver and platinum) will narrow in the second and third quarters of 2024.
Gold Forecast
The analysts at MKS Pamp have upgraded their original forecast for gold from $2050/oz to $2200/oz, citing the metal’s response to major central banks’ policies on inflation. The revised forecast considers the collective willingness of major central banks to tolerate higher inflation rates, alongside robust physical demand. Furthermore, they highlight the surprising strength of Asian and central bank physical demand, which has led to new higher price floors for the precious metal.
Supply and Demand Dynamics
Despite the analysts’ expectations for interest rate cuts and increased investor participation not aligning with reality, gold prices have continued to rise. Structural selling has remained subdued, allowing gold to maintain its upward trajectory.
Revised Forecasts
The updated predictions now see gold averaging $2200 per ounce in 2024, with a higher floor of $2000. The analysts anticipate gold to exhibit bull market gains that echo past rate cutting cycles, possibly reaching $2475/oz or higher.
Risks and Considerations
While the analysts remain bullish on gold, they caution that the market sentiment has become overwhelmingly positive. Concerns over potential downside risks include large gold holders liquidating their positions and strong secondary physical sales from retail coin and bar holders.
Silver Outlook
Shifting focus to silver, MKS Pamp notes a promising setup for the metal, contingent on increased investor demand to catalyze further growth. Silver’s fundamental story appears strong with structural supply constraints potentially driving prices higher.
Structural Deficit and Price Projections
Having entered a structural deficit in 2021, silver is poised for further upside as supply struggles to keep up with demand. The analysts have adjusted their bullish forecast for silver from $25/oz to $25.50/oz, anticipating a reduction in the Gold/Silver ratio towards its lower end.
Final Considerations
While the outlook for gold and silver remains positive, market positioning and external factors could introduce volatility into the precious metals sector. It’s essential for investors to stay attuned to changing dynamics and consider potential risks associated with their holdings.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/or damages arising from the use of this publication.
