Gold prices rallied sharply in 2023 and moved above $2000 amid a correction in the US dollar and US treasury yields after US FED hit a pause button on its rate hike campaign and signalled rate cuts in 2024. Additionally, prices remained firm due to central bank buying and escalating geopolitical tensions.
The brokerage expects bullion to touch Rs 70,000 this year.
” Concerns over slower global economic growth and escalating geopolitical tensions in the Middle East may continue to make gold valuable as a hedge against uncertainties Additionally, central banks are likely to continue with their buying spree, diversifying their reserves,” said Pankaj Pandey, Head of Research at ICICI Securities.
Rate cut will boost prices
Wars are still rampant on multiple frontiers that could deliver price shocks
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Hamas and Israel war -
Ukraine and Russia war -
Yemen Houthi attacks on ship in Red Sea
Geopolitical tensions and central bank buying will support gold prices
Global central banks purchased 337 tonnes of gold in the third quarter of calendar year 2023, the second-highest third quarter on record. Moreover, central banks have purchased 800 tonnes of gold this year so far which is 14 per cent higher compared to the same period last year. Looking at the current situation, the central bank will continue to add gold to diversify its reserves.
Total gold ETF holdings have declined in 2023 as rising interest rates diverted investors’ attention away from gold. ” We believe fresh investment demand may kick in 2024 amid weak dollar and expectation of rate cuts across major economies. Further, investors will buy gold as store value amid escalating geopolitical tensions in the Middle East and aheadthe of election in major economies including India and US,” said Pandey.
The brokerage believes silver prices will touch Rs 85,000 this year as the market is likely to remain in deficit for a third consecutive year.
First Published: Jan 05 2024 | 8:58 AM IST