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Business News/ Markets / Commodities/  Outlook 2024: Can gold maintain its shine next year? Here's what experts say

Outlook 2024: Can gold maintain its shine next year? Here's what experts say

Gold prices remained resilient in 2023, giving a return of about 14 per cent in international markets and jumping nearly 16 per cent in the domestic market as of December 28, supported by economic uncertainty and expectations of a Fed rate cut in 2024.

Gold is considered a safe-haven asset in times of geopolitical turmoil.

Despite strong dollar and rising US treasury yields, gold prices remained resilient in 2023, giving a return of about 14 per cent in international markets and jumping nearly 16 per cent in the domestic market as of December 28.

The yellow metal took support from economic uncertainty amid geopolitical tensions and the expectations of a Fed rate cut in 2024.

Sticky inflation also supported gold prices as it is seen as a hedge against inflation. When the value of currencies falls due to rising inflation, investors tend to buy gold to preserve the value of their investment which increases the demand for gold driving its price higher.

The outlook for gold is positive as experts believe gold rates may remain elevated over the medium term due to geopolitical factors. They underscore investors may continue to stay invested in gold and buy more on any price decline.

Gold is considered a safe-haven asset in times of geopolitical turmoil, economic uncertainty, or financial market instability. Besides, the exposure to gold makes one's portfolio diverse and minimises the risk of over-exposure to a particular asset class.

Also Read: Gold price may touch 67,000 in 2024 on the rise in demand. Should you buy?

Mint collected the views of several experts regarding their opinions on gold's prospects in 2024. Here's what they said:

Sunil Subramaniam, MD and CEO of Sundaram Mutual Fund

Gold is a good investment option currently given the expectation of a prolonged two to three years rate cut cycle and consequent dollar weakness.

The ideal allocation would be two-thirds equities and balance gold for those investors comfortable with some degree of volatility. For more conservative investors 50:25:25 for equity: gold: debt would be more appropriate.

These views are for a five-year holding period. Anything shorter in time horizon is not recommended given the state of valuations.

Chirag Mehta, Chief Investment Officer, Quantum AMC and Ghazal Jain, Fund Manager, Alternative Investments, Quantum AMC

Gold can be a useful asset to hold in 2024. As interest rates peak and the timing and extent of rate cuts remain uncertain, it can provide an opportunity for markets to speculate, creating volatility across asset markets, including gold.

Markets can oscillate between optimism and pessimism creating wild short-lived swings in gold prices on either side. Use these swings wisely to build your allocation to gold which can benefit from the eventual turn in Fed policy, which is now a given at some point next year.

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Naveen Mathur, Director - Commodities and Currencies, Anand Rathi Shares and Stock Brokers

Gold outperformed most traded commodities in the current year in international markets with prospects for the next year also looking firm.

As the impact of higher interest rates starts to bite growth in coming quarters, market participants anticipate interest rate cuts by the end of the first quarter of next year.

Historically, gold has always delivered a positive monthly average return during times of on-hold interest rate periods.

Moving ahead, we anticipate gold to witness fresh all-time highs in 2024, with levels of $2,250 still achievable in the first half of 2024.

MCX Gold may also witness new all-time highs with targets of 67,000 – 68,000 per 10 grams, with an annual return of 10–11 per cent in 2024.

Also Read: Gold’s increasing relevance in your portfolio

Deepak Jasani, Head of Retail Research at HDFC Securities

In the year 2023, two major developments—geopolitical turmoil and economic uncertainty—propelled gold to new highs on the domestic and Comex markets.

Going ahead, there is potential upside as the market is pricing in a series of rate cuts in 2024, which could dampen dollar demand and treasury yields and boost gold demand.

Continued buying by central banks and an expected rebound in ETF buying could be additional upside triggers for gold.

We believe gold will continue to give an impressive return next year. Comex gold finds support at $1,925/$1,860 and faces resistance at $2,126/$2,181.

Axis Securities

The overall outlook for gold prices appears positive, supported by central banks accumulating the precious metal at each dip.

In the previous year, central banks acquired over 1000 tonnes of gold, and in the current year, the accumulation stands close to 800 tonnes in the first nine months, reflecting a 14 per cent year-on-year increase.

Technical indicators paint a bullish picture for gold as it trades above the 20 and 60-period monthly exponential moving averages (EMA) on the monthly chart, with the Relative Strength Index (RSI) surpassing the 60 level, signifying robust upside momentum.

A monthly close above $2,070 is poised to pave the way for gold to ascend towards the $2,250 level, implying a potential return of close to 9 per cent within a year.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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