Gold Price Outlook – April 2024

“Gold Price Outlook
Gold prices have made nine new record highs, on an intraday basis, from 6 March 2024 through 4 April. While there are many reasons for gold prices to be strong, the recent run up in prices seems to have been excessive based on current economic, political, and gold market conditions.

Momentum has been carrying prices higher, and could carry gold prices higher still, but there are some signs of fatigue in the market which could point to a period of consolidation or even a pullback. During such a pullback it would not be surprising to see gold prices slide back toward $2,200 or even $2,150. If prices fall below these levels it could mark the start of a downward trend. Gold Prices

The current upward trend in gold prices would remain intact if gold retests and remains supported above $2,150. Any such pullback could create fresh buying which could potentially push gold prices to fresh records.

CPM continues to project higher prices later this year into 2025, although our view has been that a period of price consolidation could ensue in the interim.

There are several risks to the expectation that gold prices would continue rising over the next three to six months. The market is pricing three rate cuts in the U.S. starting in June. While the number of rate cuts are in line with what the Fed has projected for this year, the timing of the first cut could be too early, which could weigh on asset prices across the board. Economic growth in the U.S. still is strong and inflation data so far this year has been mixed, not giving the Fed sufficient confidence to cut rates.

It is unclear and somewhat unlikely that enough negative economic developments will happen over the next two and half months to boost the Fed’s confidence in cutting rates. It is also possible that the European Central Bank (ECB) will get to cutting rates sooner than the Fed, given the relatively weaker economic conditions in the region and the ongoing reduction in inflation. This could cause the dollar to strengthen against the euro, which often has at least a short-term negative impact on the price of gold. And finally, prices tend to soften on a seasonal basis as investors and fabricators in the northern hemisphere head into the summer months, which could add further headwinds to gold prices in the near term.

While gold prices are expected to soften over the next three to six months prices are unlikely to slide in any meaningful way below $2,000 during this period. The possibility that interest rates remain higher for longer could potentially increase the likelihood of a recession sometime in late 2024 or 2025. There are also lingering concerns about the massive amounts of commercial mortgage backed securities that come due over the next several quarters and the numerous political issues that continue to threaten economic growth. All of this should prevent any decline in gold prices below $2,000. The U.S. general election also is likely to increase market volatility as November approaches, which should further help gold prices later in the year.”