Investing.com – ABN Amro has issued a cautious outlook for the price through the end of 2024, maintaining its year-end forecast of $2,000 per ounce. Currently, one ounce of gold costs $2,327.28. In their latest report, Georgette Boele, Senior Economist in Sustainability at the bank, highlights several factors that influence the current state and future developments of the gold price.
“The gold price peaked early this year, but has since lost momentum,” Boele said. According to the report, the traditional correlations that typically drive gold prices have disappeared, leading to a complex and uncertain market environment.
Central bank policy and real interest rates in the US
The expected easing measures from central banks have not supported gold prices as expected, the expert noted. While the European Central Bank (ECB) started easing in June, the first interest rate cut by the US Federal Reserve (Fed) is not expected until September. “Expectations for an easing of monetary policy in the US have fallen this year. Therefore, from this perspective, the gold price should have been lower and not higher,” Boele explains.
Moreover, the relationship between US real interest rates and the gold price has deviated from the norm. “Real interest rates in the US have risen, while the gold price has also risen,” Boele said. Normally, higher real interest rates would dampen the gold price.
US dollar and supply of physical gold
The strength of the , which is up about 5% this year against a basket of currencies, tends to put pressure on gold prices. However, the gold price has risen by almost 11% in the same period, which Boele says contradicts the usual inverse relationship.
Concerns about a shortage of physical gold, which was a factor during the COVID crisis, are unfounded in the current market, Boele noted. “There is no shortage. Gold coin premiums are below their long-term averages, and some gold coins have negative premiums.”
Investor activity and market sentiment
Investor behavior shows a mixed picture. While ETF investors have reduced their positions to 2019 levels, speculative positions in the futures market have increased. “The increase in the number of speculative positions in the futures market may have offset some of the impact of the liquidation of ETF positions,” Boele said.
According to Boele, the main drivers of the higher gold price this year were purchases on the futures markets, purchases by central banks, especially from China, and a positive technical picture that led to trend purchases.
Gold Price Outlook
Looking ahead, ABN Amro remains cautious. The gold price trend is positive, but momentum is waning. The unusually positive relationship with the US dollar and US real interest rates is considered temporary. “If the gold price responds again to central bank expectations, it should remain stable against the US dollar and slightly higher against the euro,” Boele predicts.
Because there is currently no shortage of physical gold and the central bank’s purchases do not justify current price levels, the bank maintains its gold price forecast of $2,000 per ounce for December 2024.
Technically, Boele declares the support zone between $2,220 and $2,275, where previous highs and lows overlap, as a key area. “Below that, the next support zone awaits at $2,115, where the 200-day average lies. If prices fall below the 200-day average, the long-term trend turns negative.”
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