Unwavering Glow: Investors Optimistic about Gold’s Prospects
A group of financial experts has shared their confidence in gold's lasting appeal with Bloomberg News, revealing their intentions to maintain or increase their involvement with the precious metal in the coming year.
Gold has faced recent challenges due to rising real yields, a stronger US dollar, and expectations of sustained higher US interest rates. A survey spanning various investors, from sovereign wealth managers to hedge funds, paints a cautiously optimistic picture of price trends leading into 2024.
None of the participants plan to decrease their gold exposure in the near term, with five indicating plans to boost their allocations. Over two-thirds of respondents anticipate price increases, and five foresee an all-time high. This survey took place from August 10 to August 22.
Uncertainty prevails over the timing of the Federal Reserve’s tightening cycle conclusion, a factor that would favor gold due to its non-interest bearing nature. Globally, central banks grapple with persistent inflation, while the US job market remains surprisingly resilient despite aggressive monetary tightening.
While investors brace for prolonged high interest rates, the swaps market still indicates no further rate hikes and a potential policy easing shift next year.
“We anticipate pent-up demand for gold as investors await the Fed’s conclusion,” says Darwei Kung, commodities head at DWS Group. Kung envisions gold reaching $2,250 per ounce.
Currently trading near $1,900 per ounce, gold has seen an approximately 8% decline from this year’s peak, which occurred in August 2020 amidst global economic turbulence from the COVID-19 pandemic.
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Economists’ growing confidence in a soft landing for the US economy contrasts with earlier expectations of a sharp downturn.
Another survey forecasts gold trading at $2,021 per ounce a year from now, reflecting continued concerns about geopolitical tensions, macroeconomic uncertainties, central bank acquisitions, and strong retail demand in emerging markets.
According to the World Gold Council, the decoupling of equities and bonds strengthens gold’s case as a portfolio diversifier.
However, in the short term, pessimism lingers about gold’s prospects. The upcoming Jackson Hole gathering of central bankers, including a speech by Fed Chair Jerome Powell, will provide crucial insights into interest rate directions.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
