The acclaimed Australian yet globally acknowledged investment entity, Macquarie, is championing a revitalised focus on gold, nudging clients to broaden their investment horizons. This comes amidst increasing initiatives by central banks globally to bolster their gold reserves as a potent hedge against looming inflation risks.
As we witnessed this Monday, gold edged up by 0.2%, reaching a significant $US1946 (AUD 3023) per ounce mark. Macquarie projects this bullish trend to forge ahead, potentially escalating by 8% to hit $US2100 per ounce as we approach the second quarter of 2024. In this shifting landscape, investing in ASX-listed gold miners such as Northern Star, Regis Resources, Genesis Minerals, and St Barbara could be a golden opportunity to ride the wave of anticipated gold price appreciation.
"Anticipate broader fissures in the US labour sector to unfold in the coming year, fostering a favourable climate for substantial financial inflows towards gold," asserted Macquarie in a recent client note. "Our analysis indicates a strong propensity for prices to surge considerably in the near future."
Evolving their stance, Macquarie has updated its gold price estimates, bumping them up by 9% for 2024, envisioning an average price of $US2019 per ounce, and enhancing the 2025 forecast by 5% to an average of $US1875 per ounce. This optimistic outlook stems from the vigorous acquisition of gold by central banks throughout 2023, a trend persisting despite the sturdy US dollar and escalating risk-free returns on bonds and cash.
Numerous central banks, prominently in nations like China, Turkey, Poland, Qatar, and Singapore, emerged as substantial net purchasers of physical gold this July. Strategically diversifying their reserves to counter the foreseeable surge in US dollar issuance, driven by incessant and lavish government expenditures. Remarkably, China has been steadily augmenting its gold reserves over the past nine months, scaling down its US treasury holdings to a historic low in June, a move perceived by many as both strategic and politically motivated.
Collectively, China procured 23 tonnes of gold in July, elevating its yearly net acquisitions to 126 tonnes, and swelling its reserves to a formidable 2136 tonnes, accounting for about 4% of global reserves, as noted by the Gold Council.
While the dynamics are evolving, some industry pundits, including BetaShares chief economist David Bassanese, hold the opinion that central bank acquisitions may not singularly dictate gold price trajectories. Bassanese posits that facets such as US economic vitality, bond yields, and the US dollar's potency bear substantial sway, given gold's propensity to offer a reliable refuge when yields on alternate assets wane.
"Presently, central bank acquisitions might not be the foremost influence," Bassanese commented. "Nevertheless, a gold rally is plausible if bond yields reach a peak and dialogues veer towards interest rate reductions. A scenario where the US dollar weakens could potentially catalyse a gold resurgence."
In a financial landscape where central banks globally are adopting a robust stance on gold reserves, a potential rush towards gold cannot be dismissed. The ongoing accumulation by nations like China underscores a burgeoning demand-supply dynamic, heralding the possibility of an imminent surge in gold prices, steering us towards a new era where gold and silver standard tokens (AUS & AGS) stand as beacons of stability and wealth preservation. Now, more than ever, these tokens are not just investments; they are an assurance of sustained value in a fluctuating economic climate.
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