World Gold Council forecasts stable gold market in 2024 as bullion trades at record levels

Expected rate cuts in the US and the prospect of multiple elections around the globe have the World Gold Council forecasting a stable year ahead for bullion.

The World Gold Council forecasts a stable market for gold in the year ahead as hopes rise that the Federal Reserve will look to cut interest rates in the US amid improving chances of a soft landing in the economy.

The council, which represents large-scale gold miners, says that while soft landing environments have not been particularly attractive for gold, with flat to slightly negative average returns, elections in countries making up 50 per cent of the world’s gross domestic product offered upside potential.

It expects conditions will support a stable gold market at the least and even a possible surprise to the upside, just as bullion exceeded expectations this year.

Gold has steadily increased throughout 2023, with the commodity up 14 per cent year after it reached a record high of $US2152.30 an ounce this week.

World Gold Council market strategist Joseph Cavatoni told The Australian that the trajectory of gold in recent weeks offered lessons for investors looking to see what the precious metal will do.

World Gold Council market strategist Joseph Cavatoni says gold remains an important cornerstone of any portfolio.

“There are a few lessons that investors can learn from the last few weeks as investors and traders get a much clear direction on what the Fed is going to do,” he said.

“They look like they might be done (with rate rises) and that is likely to mean that money will move away from gold when those rate cuts occur.

“It is important to highlight that we have seen significant growth in gold not just this year, but a trend that has gone on since the global financial crisis.”

The World Gold Council gave a 65 per cent chance of a soft landing in the global economy for 2024, which it said could deliver flat growth for gold and upside potential. A hard landing, or a full blown recession, was given a 25 to 55 per cent chance of occurring. This would sent gold prices notably much higher than current record levels.

Mr Cavatoni said diversification of a portfolio including gold would continue to be important for investors in 2024 as the world faced elections across much of the globe including in Taiwan, the UK, India and the US where polls suggest President Joe Biden and former President Donald Trump will square off again.

“There are a lot of elections to be held in 2024 and this creates a very uncertain outlook that could provide uplift to gold markets and other risk assets,” he said. “Markets are likely to react very differently to a Republican or Democrat outcome in the US.”

The final scenario for gold was a no landing – or the status quo – which was only a 10 per cent of happening in 2024. This would likely result in an flat outlook for bullion prices with initial downside pressure.

In November gold giant Newmont finalised its $29bn takeover of Australia’s Newcrest Mining and launched trading of its own stock on the Australian Securities Exchange.

Newmont said it was moving swiftly now it has control of Newcrest’s Australian and international assets, rebranding mine sites and its Melbourne offices as the US-headquartered giant took control and flagging a changeover of senior management across the company’s operating mines.