“New absolute record gold“This is probably one of the most repeated phrases in the commodities market this year. There is no doubt that the precious metal has been one of the great protagonists of recent weeks and months, appreciating more than a 25% so far in 2024. And it promises to continue to be so judging by its behavior in the market.
“It is possible that gold will reach the zone of $2,600since the bullish momentum remains quite strong, supported in part by the decline of the dollar and the possibility of a cut in interest rates in the United States,” explains Alexander Londoño, market analyst at ActivTrades.
However, the majority do not predict that its good performance will continue in the immediate short term. As indicated in the market consensus of BloombergThe average investment firm expects gold to remain below $2,500 at the end of the year and return to $2,450 by mid-2025.
“The behavior of the gold price this year has been remarkable, not only for the historical highs reached, but also because of the factors that motivated it“, says David A. Meier, Julius Baer economist, who explains that the spring rally occurred without the support of gold’s traditional drivers, such as the U.S. dollar, U.S. real bond yields and Western safe-haven demand.”
From the Swiss entity, they point out that instead, The gold market was entirely focused on Chinese investment demand and purchases by central banks, particularly the People’s Bank of China.but since the beginning of the summer, both have been absent from the market. Despite this, “this has not dented the bullish mood in the gold market, as attention has again focused on the growth outlook and the Fed’s monetary policy, causing the dollar and yields to rise. US bonds are once again the protagonists of late.”
Concerns about the US growth outlook and expectations of interest rate cuts by the Federal Reserve have drawn Western investors back to the gold market, but for a renewed bullish trend in the medium to long term, the return of gold demand from Chinese investors and the resumption of purchases by the People’s Bank of China will be essential.
Of course, the timing of the return of the Chinese central bank is very uncertain. Historically, you have suspended your purchases for long periods, from a few months to two years. “We hope he will return to the gold market sooner rather than later, given the current tensions between China and the United States and the resulting desire to become less dependent on the US dollar as a reserve currency.. However, the gold market may need a little more patience before this year’s remarkable record is resumed,” said Julius Baer.
From Nextep FinanceVíctor Alvargonzález, strategic director of the independent financial consultancy, highlights the “fear virtual “You just have to create the feeling that there is a war or a bubble for the market to act accordingly, because when you play with fire, there is a good chance that everything will burn,” he emphasizes to explain a new rise in the metal.
Of course, the expert warns that one must be careful not to fall into “speculative traps”, because, as it rises, gold can fall and, when buying, it is better to do so when it “cools down a little” since all metals can “overheat”.
Gold producers, an alternative?
For her part, Charlotte Peuron, equity fund manager at Crédit Mutuel Asset Management, points out that a renewed interest has also been detected for companies operating in the gold sector.
In fact, he says, “precious metal producers are the main beneficiaries of the rise in gold prices.” Currently, companies are achieving very good financial results because their costs are under control and their sales prices are increasing. “As a result, companies are generating very high, even historic, margins,” he believes.
