Changing interest rate expectations are creating volatility in the gold market again as prices try to return to $2,000 per ounce. However, according to a market strategist, this volatility represents a buying opportunity for investors looking for value in the precious metals market.
What levels will gold be at?
Kitco analyst Neils Christensen cited the comments today from Nitesh Shah, head of commodity research at WisdomTree. According to him, gold prices are likely to be much higher a year later. That’s why any price below $2,000 is an attractive entry point for investors. He expects gold prices to rise to $2,285 per ounce in the first quarter of 2024. That’s why the figure represents an all-time high for the precious metal, he added. WisdomTree’s view came amid gold prices last trading around $1,975. At this point, Shah said, “Gold prices are high compared to last year. But it still looks cheap compared to where we’ve seen it go. There is still plenty of value at current prices.” uses the phrase.
Gold fell solidly towards $2,000 an ounce last month as relatively healthy economic sentiment continued to support the Federal Reserve’s aggressive monetary policy stance. Markets priced in most of the rate cuts expected for most of April. However, as expectations have changed once again in recent weeks, gold has found critical support around $1,950 per ounce. Many analysts and economists point out that the Federal Reserve is nearing the end of its tightening cycle. Markets expect the Federal Reserve to keep interest rates unchanged at its meeting next week. On the other hand, the probability of a new rate hike in July is only 53%.
Recession probability
Although interest rates continue to rise, Shah says gold investors should fear less as each new rate hike brings the global economy closer to recession. He added that although the economy is reasonably resilient, the threat of recession has not completely disappeared. Shah emphasizes that central banks have never designed a successful “soft landing” for the economy. He also says it’s unlikely they’ll do that in this tightening cycle, either. “I would love to be able to believe the soft landing scenario,” Shah said. But there is something in me that makes me doubt that this can be achieved. They’re too focused on the inflation part of the equation.” says.
Shah also notes that central bankers and politicians place too much emphasis on the labor market, which is not as healthy as it seems. He says the labor market is not tight due to strong economic growth. He emphasizes that systematic demographic problems, exacerbated by the COVID-19 pandemic, are creating market congestion. As for what will get investors back into the gold market, Shah says it will likely take a full-blown recession to seriously boost investment demand as stock markets plummet. Shah added that because the recession has been pronounced for so long, investors won’t be convinced it’s happening until it’s midway through the recession. However, Shah stresses that investors should not wait for the recession. Moreover cryptocoin.com Looking at it as a bullish outlook for gold. “Now is the time to prepare your portfolio. “The time to act is not when the risk event occurs, but before the risk happens.”
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