French Bank Société Générale (SocGen) is slightly reducing its interest in the precious metal. However, he remains bullish on the precious metal as inflation remains stubbornly high amid the Federal Reserve’s plans to end its tightening cycle. In this context, SocGen is updating its 2023 year-end and 2024 gold price forecasts.
Gold price will return to $2,000 by the end of this year
cryptokoin.com As you followed from , gold had a lackluster performance throughout the summer. Despite this, SocGen remains optimistic that the gold price will return to $2,000. In this regard, the bank makes the following statement:
Headline inflation continues to cool. But core inflation remains stubbornly high. Meanwhile, the Fed is near its cyclical peak. As the timing of a potential U.S. recession recedes, these developments give the Fed the opportunity (and obligation) to keep rates higher for longer to combat inflation. This should keep real interest rates high and, along with the strong dollar, create headwinds that should limit the gold price to $2,000 or below by the end of this year, the bank’s commodity analysts said in their latest outlook report.
SocGen expects gold price to reach $2200 in 2024
Looking ahead to the new year, analysts predict gold will rise to $2,200 by the end of 2024 as investors realize how difficult it will be for central banks to reduce core inflation to their 2% target. As the basis for this estimate, analysts make the following assessment:
We think the gold market will have to price in higher forward CPI projections as the low-hanging fruit has already been picked in the fight against inflation. After all, the market adjusts its forward-looking inflation expectations based on the flow of macro news. Therefore, we think that gold will gain value up to $ 2,200 with partial movements until the end of 2024. Additionally, in our scenario of moderate US interest rates, we see the US dollar weakening. This is an additional bullish factor that should support gold along with other US dollar assets.
The path to ascension will not be easy!
Although SocGen is bullish on the gold price, he states that gold will face a bumpy road. Analysts say there is still room for investment demand to weaken. Their view is supported by the fact that assets in the world’s largest gold-backed exchange-traded fund fell to their lowest level since January 2020. Based on this, analysts come to the following conclusion:
Although 139 tonnes of gold have been withdrawn from the ETF vault since early June, the current value of 2,789 tonnes is more than 20% of the average holding in 2016-20. These higher amounts could open the door to further outflows from ETFs in the short term, unless bullish catalysts encourage investors to dive deeper into gold.
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