2024 Gold Price Targets Surge Across the Board

2024 Gold Price Targets Surge Across the Board

From Peter Reagan for Birch Gold Group

This week, Your News to Know rounds up the latest top stories involving precious metals and the overall economy. Stories include: Gold dazzles for another week as it passes $2,150 again, what we’ve learned about why gold is going up, and what it’s like to be a Chinese gold consumer right now.

Gold passes $2,150 again and 2024 price targets rise

Another week of sitting back and seeing how far analysts are willing to push today’s gold price predictions for the year. We were here last week at $2,080, and $2,150 is the latest pit stop in the race to $3,000. Right now, sky-high forecasts are abundant.

Following a run that left it at a new all-time high of $2,195, gold spent the better part of the last week seeing how low the bouncing back point is. Pretty high, it would seem, as it remains near the mentioned level, currently above $2,160 as I type. (Will we ever see gold below $2,000/oz again?)

So analysts are busy revising their forecasts. Goldman Sachs updated their annual average forecast from $2,090 to $2,180 (a 4.3% increase). Clearly, they are expecting considerably elevated prices. A quick look at some of what other top firms are saying shows us why.

Morgan Stanley upgraded their forecast for this year to $2,300. Their team mentioned how central bank buying is negating any profit-taking that might otherwise push gold prices down, and expect this (combined with demand from individual investors) will keep pushing gold higher.

JP Morgan claims that’s just plain too low. JPM analysts see gold going all the way to $2,500 this year, with surprisingly moderate conditions required. In short, gold needs more of the same in terms of inflation and jobs and other economic numbers (which will inevitably return central banks to interest rate reduction and its attendant risks).

Every time a price goes up, you hear voices warning that it will go back down. However, the number of upgraded forecasts anticipating higher prices vastly outweigh the skeptical voices. Instead, the voices predicting a correction in gold’s price seem to think that must happen in order to achieve economic business-as-usual. But that’s what gold is there for! At least for long-term investors (as opposed to speculators), for many, gold is what we own when we’re concerned about a departure from the economic status quo.

Perhaps the most savvy gold owners don’t concern themselves so much with why gold’s price is going up. Prices fluctuate, day to day, week to week – and it’s probably a mistake to overfocus on short-term movements when the real story is that of a long-term, lasting upward trend.

One-year price targets are nice. But honestly I care a lot more about what gold’s price will be in five or ten years.

Everyone’s admitting gold’s price surge is “unprecedented”

For most assets, it might not be “economically correct” to say that they’ve risen for reasons you can’t explain. Such an admission implies excessive pricing – if you can’t understand it, maybe there’s no there there? But in the case of gold, just about everyone is saying they aren’t sure what’s going on. Gold’s price keeps rising and they aren’t sure why.

That is the beauty of the yellow metal’s fundamentals. Analysts can question price jumps without really making it sound as if they’re questioning the price itself. See, that’s the problem – analysts can’t directly talk about a high gold price without also discussing the forces that generally drive gold higher. You know, things like:

  • Inflation, rising prices and currency debasement
  • Geopolitical uncertainty
  • Economic instability

It’s becoming mainstream to admit that this surge in gold’s price isn’t like the others. There’s no single black swan or crisis to point to, no simple story. This immediately suggests that something has gone wrong with the domestic economy, more specifically with the U.S. dollar.

We spent a good part of the second quarter of 2023 describing how gold moved up in an environment that should’ve translated into a tepid or sideways market. Some six months back, it was far more popular to check the headlines and blame the headline for pushing gold’s price up.

These days, there just aren’t any easy explanations that hold water.

Some, like the World Gold Council, list a variety of drivers working in the back in gold’s favor, including rate cut expectations and yield drops. Others have went a bizarre route and are attributing gold’s recent popularity to the rise of a “World-is-ending” mindset, which supposedly drives investment into things like gold, ammunition and doomsday bunkers.

It’s a pretty far-fetched explanation that tells us we are once again met with a lofty price level, this time a new all-time high, and have little left but to hope to understand what drives the run. We do like the WGC’s effort because it points to something we’ve been trying to emphasize for years: gold rests in an almost ideal environment for price gains.

We’ve suggested many times in the past that gold’s captures of new highs be left partly as-is. Maybe gold is just playing some much ado catch-up, and all one can hope to do is come up with a lofty hard stop for the current run.

We agreed when Ronald Stoeferle recently advised investors to enjoy gold’s then-prices of $2,050, as even those are high and mean that gold is fulfilling its purpose. On the other hand, it’s easy to get caught up in discussions of high prices. All the more so, since the desires of many for higher prices have finally materialized, and are perhaps just taking shape.

Gold buyers clearing shelves worldwide

From Dubai to China, coin shops and jewelry stores have had their hands full due to the sharp increase in gold prices. In the UAE, jewelers report that tourists remain their most reliable customer. Everyone else, they note, is trying to wait and “buy the dip” in the short-term.

Chinese gold premiums have been climbing across the board, starting with a 5.4% higher price on the Shanghai Gold Exchange compared to two weeks back. Yet however bad the spot situation is to those wishing to make an entry with the yuan, gold consumers have it worse.

Gold jewelry prices reached an all-time high on March 11 and stayed there since. Yet the week that followed was one where premiums actually subsided, going to $15-$25 from $20-$36 a week prior. It’s an effort by dealers to avoid a situation where every buyer is a tourist or someone similarly unconcerned with price levels.

It’s telling that, despite premiums being what they are, we keep hearing about investors in China somehow doubling down on their fondness of gold. The latest report details how China’s younger investors are turning to one-gram gold beans as an affordable form of gold bullion investment. (Over a year ago, younger investors in the U.S. did something similar.) Despite steep premiums (as a percentage over spot price) for smaller weights of bullion, investors can’t get enough gold.

Western gold investors can learn a thing or two from their Chinese or Indian counterparts. In either of those countries, buying gold is a long-term affair. Sometimes they buy for themselves, as a safe haven store of value. Other times they’re buying gifts for festive occasions – but for the same reason. Why do newlyweds want appliances and sets of porcelain dishes? Fashions and tastes come and go, but the value represented by real physical gold bullion lasts and lasts. Gold is intended to be held for one’s entire life (barring catastrophes) and, if possible, passed down to the next generation.

Such an investment approach has left Indian households with a lot of gold and is now ensuring that the frivolous spending urges of China’s youth are directed to a store value. For all the difficulties jewelers have recently faced in Asia, they still enjoy a base of customers who mostly buy regardless of price. They buy little by little, occasion by occasion. Over time, it adds up.

Sound gold investment is approached with a long-term perspective, and gold has never disappointed with that one. There’s a lot to be said for an investment you can turn into a legacy for your heirs with the confidence that, even if everyone has their own flying car to take weekend trips to Mars, gold and silver will still be prized and valued assets.

2024, Featured, gold as investment, gold demand, gold price