Gold was one of the few commodities that performed well last year. But take a look at the price development yourself (as of January 29, 2024, 9:00 a.m.):

Source: www.aktienscreener.com

Accordingly, the price of gold rose by around 10% in 2023. This is a considerable increase for a commodity that usually has a more conservative performance. But more important than looking at the past is the future. What can we expect from the gold price in the current year? Will the precious metal generate profits, or should investors be cautious?

Gold price in 2024 and 2025: JPMorgan predicts new records Many analysts are currently optimistic. Let’s take a look at a new study from the renowned US bank JPMorgan. In short, experts expect new record levels in significant amounts for gold and silver.

But let’s start at the beginning: JPMorgan currently sees gold and silver as the most attractive investment story in the commodity sector. Gregory Shearer, responsible for precious metal strategy at the US bank, points out a favorable entry point that could soon arise. Currently, the price of gold is still relatively high in relation to the underlying interest rates and fundamental exchange rates.

Therefore, the market price is vulnerable to setbacks. And according to Shearer, investors could use this (possible) price decline to enter the gold market. In fact, in the current year, the price of gold has already lost value overall. According to the expert, the precious metal could start a massive breakout rally in the second half of the year and rise to 2,175 US dollars per ounce by the end of the year. In 2025, prices of up to 2,300 dollars would then be possible. This would be by far a new record value.

The gold arguments for 2024: Falling interest rates, geopolitics, central bank purchases, and ETF inflows Shearer and his colleagues at JPMorgan base this forecast mainly on the interest rate policy in the USA. The market currently expects several interest rate cuts from the US Federal Reserve (FED). The political decision-makers in the Federal Open Market Committee (FOMC) of the FED have indicated at least three rate cuts for 2024, according to JPMorgan. The gold price generally benefits from falling interest rates, as the attractiveness of the interest-free precious metal compared to fixed-income assets increases again.

But it is not only the interest rates that are causing a bullish mood at JPMorgan. The analysts also mention geopolitical conflicts – such as in the Middle East. This could increase the value of gold as a „safe haven.“ In addition, there are other impulses from the demand side. According to JPMorgan, in the first nine months of 2023, central banks bought more than 800 tons of gold – mainly the People’s Bank of China (PBOC). The central bank purchases had supported the market price last year and are likely to continue in 2024. Overall, central banks could buy 950 tons in 2024, led once again by China.

Last but not least, analysts see higher demand from private actors due to the probable interest rate cuts. According to JPMorgan, at the end of 2023, the money managed in net long positions (investors expect rising gold prices) was only around 6/10 on a standardized scale. In the reverse conclusion, there is therefore much room to expand long positions either on the stock exchange or through an exchange-traded fund (ETF) by buying gold, according to JPMorgan. This is likely to have a positive effect on the (possible) price rally in the second half of 2024.

„When interest rates finally fall, we expect the recent ETF outflows to reverse, with a return to investor-driven ETF inflows also boosting demand from gold investors and reinforcing upward price movements,“ said JPMorgan analyst Shearer.

My conclusion for you JPMorgan is currently not the only bullish player when it comes to gold. For example, Goldman Sachs expects a market price of up to $2,133 per ounce for 2024, Citigroup expects $2,100, and Société Générale expects $2,200. All of the institutes calculate for a more relaxed interest rate policy. The next FED decision is already on Wednesday. The corresponding press conference is scheduled for 7:30 PM Central European Time.

For gold stocks, 2024 could be a promising year in my opinion. Many industry stocks such as Newmont or Barrick Gold lost ground in 2023 despite the strong price development. And 2024 also started rather weakly. I think the comeback potential of these stocks should not be underestimated right now.

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