Analysts Bullish on Gold and Silver Amid Rate Cutting Cycle and Geopolitical Tensions

December 19, 2023

Analysts are expecting gold to outperform in 2024.

J.P.Morgan forecasts gold and silver to outshine the rest of the metal sector, citing the Fed cutting cycle and falling U.S. real yields as the key drivers of gold prices in 2024, and anticipating the precious metal to reach an average of $2,175/oz by the fourth quarter.

“Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing an entry will continue to be critical,” said Gregory Shearer of J.P. Morgan in its December market outlook.

Other market participants share a similar view.

“Once central banks stop tightening and start easing rates, which could be next year, gold will probably go higher,” says Bruce Liegel, a macro fund manager and author of the research newsletter Global Macro Playbook. “If we have a global recession, it will impact the amount of easing that the central banks will carry out. The more easing, the higher gold can go later next year and into 2025.”

The outlook for gold’s trajectory also hinges on the magnitude of the rate cut, contingent on whether there is a hard or soft landing in the economy.

“The future path of gold is probably higher, and it’s going to be determined by the degree of the landing,” says Liegel, who writes a monthly global macro report. “If it’s a hard landing, it will go up a lot more because the central banks will need to ease more. A soft landing means that less easing is required.”

Beyond the rate cutting cycle, geopolitical tensions are also being cited as a driver of gold prices for the medium term.

As pointed out by a Morningstar report, “In an effort to gain more independence from the US dollar, EM central banks have stepped up their gold holdings substantially over the past two decades – in particular China and Russia.”