Gold prices could rise to $3,000/ounce in the next 12-18 months if the global economy suffers a deep recession, central banks increase purchases or there is inflation.
The world gold price is currently at 2,156 USD/ounce, exceeding the historic peak of 2,135 USD at the end of last year. Analysts at CitiBank believe that gold could reach $3,000/ounce in the next 12-18 months.
Mr. Aakash Doshi, North American commodity analyst at this bank, said the most feasible scenario is that the de-dollarization trend in central banks of emerging countries accelerates and pushes gold to 3,000 USD/year. ounce. Currently, jewelry is still the main driving force for gold demand.
“This trend is happening, but quite slowly. If accelerated, a crisis of confidence in the USD will take place,” the expert emphasized. CNBC.
In recent years, central banks’ gold purchases have increased to record levels, as they seek to diversify their reserves and reduce credit risk. Central banks of China and Russia bought the most. Followed by India, Türkiye and Brazil.
According to Citi bank’s forecast, gold prices may skyrocket to 3,000 USD/ounce in the next 12-18 months (Photo: Medium).
The World Gold Council (WGC) report in January also showed that Central Banks net purchased more than 1,000 tons of gold for the second consecutive year.
“If this number doubles, to 2,000 tons, we think this will be a big push for gold prices,” CitiBank experts said.
Besides, a deep global recession could also push precious metal prices to 3,000 USD/ounce. With this scenario, the US Federal Reserve (Fed) will have to drastically reduce interest rates. Interest rates could drop to 3%, or even 1%, which would help gold reach a new peak.
However, he believes that this is only a low probability scenario. Gold prices often tend to fluctuate inversely with interest rates. When interest rates fall, gold will be more attractive than instruments that pay fixed interest, like bonds.
Reference interest rates in the US are maintaining around 5.25-5.5%, the highest level since 2001. Experts predict that the Fed may reduce interest rates in May or June.
Inflation and recession could also be another driving force. Gold is considered a safe haven and tends to perform well during times of economic uncertainty as investors stay away from riskier assets like stocks. However, as above, Mr. Doshi believes that this scenario has a very low probability.
Under normal conditions, CitiBank forecasts that the average gold price will be around 2,000 USD in the first half of the year and up to 2,150 USD in the second half of 2024. The bank expects that by the end of the year, the price will likely reach a new peak.
