Gold price rose more than 20% to a record high of $2,135 in 2023. Strategists at ANZ Bank analyze the yellow metal’s outlook for the next year.

Upside to be capped for Gold in the near term

Going into 2024, we expect Gold price to average above $2,000.

While we hold a positive stance for Gold, the latest price rally looks overdone. Steady rates till H1 2024 and falling inflation will see real rates rising by 50-100 bps, which will be negative for Gold investments. Therefore, we believe the upside to be capped for Gold in the near term.

Our long-term bullish view for gold hinges on three drivers: First, the Fed will start cutting interest rates, which will reduce the opportunity cost of non-yielding Gold. Second, economic, political and geoplitical risks are expected to remain heightened in 2024. The upcoming US elections will increase policy uncertainty, while prospects of slowing economic growth might encourage investors to diversify their portfolios by adding Gold. Third, central bank purchases sustain even after two years of strong buying. We estimate central bank buying to be in the range of 800-850t, but there could be an upside risk to this number.