The gold market found critical support above $2,000. However, it lacks significant bullish momentum. But one US bank still sees significant potential for the precious metal.
It is possible for the gold price to reach 3 thousand dollars, but…
Aakash Doshi, Citi’s head of North American commodity research, says there’s a chance gold prices could reach $3,000 in the next 12 to 18 months. But this is Citi’s bull scenario. So, the base scenario is a little quieter. Citi Bank predicts that the precious metal will average $2,150 in the second half of 2024. Doshi states that gold has the potential to reach a new record towards the end of 2024.
Many analysts expect gold to reach record levels this year. The institution with the most bullish outlook continues to be Bank of America, as commodity analysts see the potential for gold to reach $2,400 this year.
The demand of the biggest joker central banks!
Aakash Doshi says the biggest wild card in the bullish outlook is the insatiable demand from central banks. He states that the acceleration of the globalization trend, which pushes countries to move away from the USA, may lead to a confidence crisis for the dollar. He also notes that it will likely prompt central banks to intensify their gold purchases.
Doshi points out that if central banks double their gold purchases, they will rival the jewelry market as the most important source of demand in the market. Because the global jewelry market accounts for approximately 50% of global gold demand.
That would be very bullish indeed for gold!
Last month, the World Gold Council announced that central banks will buy over 1,000 tonnes of bullion in 2023. Thus, there is only 45 tons left for the industry to break the record purchases in 2022. Last year, the People’s Bank of China led the gold market with its purchases. Analysts note that China’s bullion assets represent only 4% of its total reserves. That means there’s plenty of room to grow, they say. Aakash Doshi shares his assessment:
If this amount were to double very quickly to 2,000 tonnes, we think that would be very bullish indeed for gold.
The second factor that will push gold up: Aggressive Fed interest rate cuts!
The second factor that could push gold up nearly 50% from current prices is if a deep global recession forces the Federal Reserve to aggressively cut interest rates. On this subject, Doshi says the following:
This means the brakes are turned down to 1% or lower, not 3% – which would take us to $3,000. However, a deep recession is not an unlikely scenario.
cryptokoin.comAs you follow from , the Federal Reserve postponed interest rate cuts until later in the year. Therefore, gold struggled throughout the new year. According to the CME FedWatch Tool, the most likely month for the Fed to begin its new easing cycle is June.
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