The rapid rise of gold to record highs is likely to continue in the second half of 2024 due to strong fundamental factors, though the price of $3000 per ounce seems unattainable, traders and industry experts say, according to Reuters.
Investors are massively shifting to gold, anticipating monetary policy easing, increased geopolitical tensions in Europe and the Middle East, and significant central bank purchases, especially by China. The spot price of gold is trading around $2300 per ounce after reaching a record high of $2449.89 on May 20, showing an increase of more than 11% since the beginning of the year.
“There are many factors contributing to the rise in gold, but one of the main reasons is China,” said Ruth Crowell, Chief Executive of the London Bullion Market Association.
Central banks, especially China, are increasing their gold reserves due to currency depreciation and geopolitical and economic risks. Due to its protective function and low interest rates, gold remains attractive.
“Physical demand for gold is high, but we haven’t yet seen significant retail investment demand, such as through exchange-traded funds,” said Amar Singh of StoneX.
Analysts note that the upcoming U.S. elections in November may add market volatility. However, most experts remain optimistic about gold prices rising to $2600 – $2700 per ounce this year, but reaching $3000 seems unlikely.
“It’s not any particular factor holding back gold, but rather that $3000 implies another 30% rise, which is quite a lot,” said Nikos Kavalis of Metals Focus.
Silver has also performed well amid gold demand and physical demand. The price of silver traded at $29.20 per ounce, close to an 11-year high.
“The future of silver looks bright thanks to its use in the transition to green energy,” said Michael DiRienzo of The Silver Institute.
India’s silver imports in the first four months of the year have already exceeded the total volume for all of 2023, driven by growing demand from the solar energy sector and expectations of higher returns compared to gold. The silver market is now in its fourth year of structural deficit due to expectations of high industrial demand, noted Metals Focus.