Dubai: What next for gold? Reach for $2,500 an ounce?
Gold is already closing on the $2,300 mark and could have a clear shot at heading for $2,500. According to Saxo Bank’s latest global markets and commodities update, it is within the circle of possibility during 2024 itself.
Gold had started the year at $2,059 an ounce and today (April 3), it’s inching ever closer to never-before-seen $2,300 levels. It had cleared the previous ceiling of $2,200 as recently as March 21.
Gold isn’t the only metal showing some shine.
“Copper, dubbed the ‘King of Green Metals’, is also on track for success, driven by steady demand and the threat of supply disruptions,” says the Saxo Bank report. “Lower funding costs and economic support measures in places like China could further bolster the market for selected industrial metals, setting the stage for a broader commodities rebound.”
Silver prices too are shining bright, though less spectacularly so than gold. Further gains for the commodities market will have to rely on whether recent stimulus measures in China will meet their mark in giving the economy the booster it needs.
Investors are also shedding the concerns they had been nursing towards the end of 2023, principally about the China economy, the likely scheduling of US interest rate cuts, swirling geopolitical issues, and how the many elections that will be held in systemically vital economies during 2024.
Markets and assets gain more ground
For now, those concerns seem to be on hold, or it could be that investors still believe some more gains can be squeezed out of markets and asset categories.
Gold isn't the only winner in this journey - Bitcoin rallied big, and anything that had to do with AI invariably found itself a bounce in the stock markets.
But investors, keep your blinders on. "The current wave of optimism in the stock market, driven by election fever, hides a more uncomfortable truth," said Damian Hitchen, CEO, Saxo Bank MENA.
"US economy is in a delicate state, with debt accumulation outpacing GDP growth. Central banks around the globe are tightening the purse strings, which, when combined with high real interest rates and the mountain of existing debt, could spell trouble for our economic momentum.
"It is important to understand the intricate balance between election optimism and underlying economic realities. In a delicate economic landscape where debt surpasses GDP growth, it is imperative for investors to stay informed and adopt a strategic approach to navigate potential market volatility."
AI 'fervour'
Then there is the AI factor. And the new wave of obesity treatments, which has 'notably altered investment landscapes'. But is there a bust lurking around somewhere?
"The valuation of companies like Nvidia and Novo Nordisk has skyrocketed, underpinning a speculative boom reminiscent of past market bubbles," the Saxo Bank report notes. "This speculative fever, alongside a complex backdrop of economic indicators, suggests a pivotal moment for investors, encouraging a nuanced and more neutral approach towards US equities in anticipation of potential valuation adjustments."
