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Gold Price Hits New Highs and Strong Central Bank Buying Continues

December 20, 2023

Watch Time 4:45 MIN

Gold is supported by expectations that the Fed will start to cut rates soon, safe haven buying due to global geopolitical risk, and strong central bank purchases, Portfolio Manager Ima Casanova explains. She also shares our outlook for gold prices in 2024 and beyond.

Why are U.S. gold prices hitting record highs?

Gold crossed the important $2,000 per ounce level in November. It then went on to set a new intraday all-time high of $2,135 per ounce on December 4. It retreated after that to the levels that we have currently, right around $2,030 per ounce in the early days of December.

Gold is being supported by expectations that the Fed may start to cut rates soon. Markets are implying a more than 50% chance of a rate cut in March 2024.

Gold is also likely benefitting from safe haven buying as heightened global geopolitical risk persists.

After underperforming gold significantly in October, the gold equities did precisely what we expected them to do in November. Gold was up about 2.7% in the month of November, while the equities as a group were up between 11% and 15% during the month, narrowing the valuation gap between the equities and the metal.

Why are central banks stocking up on gold?

Gold has also been supported by strong central bank purchases of gold. Central banks as a group bought record levels of gold in 2022. And in 2023, they look set to match or potentially exceed those purchases. This is clearly benefiting gold.

Central banks are looking to diversify their foreign reserves, and gold is the asset of choice as they look to diversify away from the U.S. dollar.

Outlook for 2024

We're constructive on the outlook for gold prices in 2024 and beyond.

Gold seems to have established a pretty strong support around the $1,900 to $2,000 per ounce level. This is especially remarkable when we consider that investment demand, as gauged by the flows into the gold bullion ETFs, has been persistently declining this year.

Markets are trying to decide on a daily basis if a soft landing is still a possibility. We think we're getting closer to the point where the U.S. and the global economy start to significantly slow down under the strain of high interest rates and the stress of not one, but tragically now, two wars.

There is also risk that bringing inflation back down might be a long process. Historically, that has been the case. We believe that as these risks become more visible to markets and more likely to generate poor outcomes for the financial system, gold is positioned to benefit.

In 2024, we see opportunity for gold to test and potentially break through the all-time highs of $2,075 set in 2020, and more recently, $2,135 per ounce on December 4th.

The gold equities are positioned to benefit from sustained record high gold prices as investors look for leveraged and diversified exposure to the gold sector.

The gold price has averaged around $1,930 per ounce in 2023. So that's the highest ever annual average for the gold price. The companies, the gold mining companies are producing gold at all-in sustaining costs on average of $1,300 per ounce. So these companies are enjoying some healthy margins. They are producing a lot of cash and yet they remain disciplined. They are unwilling to chase growth at any cost. We think this approach should lead to the market regaining confidence and interest in the sector and result in improved share price performance for the gold mining companies.


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Investments in commodities can be very volatile and direct investment in these markets can be very risky, especially for inexperienced investors.

Gold investments are subject to the risks associated with concentrating its assets in the gold industry, which can be significantly affected by international economic, monetary and political developments. Investments in gold may decline in value due to developments specific to the gold industry. Foreign gold security investments involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, or political, economic or social instability. Gold investments are subject to risks associated with investments in U.S. and non-U.S. issuers, commodities and commodity-linked derivatives, commodities and commodity-linked derivatives tax, gold-mining industry, derivatives, emerging market securities, foreign currency transactions, foreign securities, other investment companies, management, market, non-diversification, operational, regulatory, small- and medium-capitalization companies and subsidiary risks.

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