Bank ABN AMRO states that gold is already up 10% year-to-date. For gold prices, however, he says the rally is at risk of being slowed down.
Are we at the end of the rally for gold prices?
In a note released Friday, ABN AMRO senior economist Georgette Boele notes that gold’s spectacular rally has taken prices as far as they can go this year. From this point of view, Boele makes the following assessment:
Gold prices have risen more than 10% against the US dollar this year. A weaker dollar and expectations that the Fed’s rate hike cycle will soon end are the main reasons behind gold’s strength. Concerns over the economic outlook, inflation and geopolitical tensions also helped. We think that the upward movement from the current levels is limited.
Gold risks falling to these levels!
Georgette Boele points out that with June Comex prices trading at $2,018.70 per ounce, gold risks falling to the $1,900-1,950 range before continuing its uptrend. Because, most likely, the Federal Reserve won’t cut interest rates as soon as markets expect. Therefore, this limits the upward movement of gold. In this context, Boele says:
Markets expect the Fed’s rate cuts to begin in the third quarter. This is reflected in gold prices. We expect interest rate cuts to come later. We also anticipate that easing will only begin at the end of this year.
Gold prices will gain momentum in 2024
cryptocoin.com As you follow from , the biggest pressure factor for gold is the strong dollar. According to Boele, the US dollar will also put pressure on gold in the next few months. That’s because the dollar is likely to rise as markets re-price the Fed’s rate cuts for a later period. But Boele says the overall upward trend is persistent. In addition, the Fed states that gold prices will gain momentum in 2024 as the European Central Bank and the Bank of England begin to loosen their monetary policies. Boele expresses his views on this issue as follows:
The Fed, ECB and BoE’s loosening of monetary policies will be positive for gold prices in 2024 due to the narrowing of exchange rate differences between USD/EUR/GBP and gold (zero interest asset). A significant difference will remain in favor of these currencies. Therefore, the effect is likely to be less strong than when interest rates were much lower.
According to ABN AMRO’s current gold forecast, prices will be $2,000 in 2023 and $2,200 in 2024.
