Strategists at Commerzbank, a German banking giant, have adjusted their gold price outlook for 2024 slightly downward to $2,100 from their previous estimate of $2,150. This revision comes amidst shifting expectations surrounding Federal Reserve policy. Despite this adjustment, Commerzbank remains optimistic about the overall outlook for precious metals, including gold.
The bank’s revised Fed interest rate assumptions now predict a smaller cut to 4.25% by the end of 2025, compared to their previous projection of rates declining to around 3.5%. This adjustment reflects the strong growth in the US economy, which could lead to less aggressive easing measures in the future.
Even with the revised forecast, the $2,100 gold price projection for 2024 still falls just below the record high of $2,135 reached in 2023. This suggests that there is still room for further upside potential for gold, even with a more tempered Fed trajectory.
Commerzbank anticipates that gold will continue to see price appreciation in 2024, marking a seventh consecutive year of gains. The appeal of precious metals like gold as a hedge against inflation and uncertainty, especially in a low-interest rate environment, continues to support the bank’s positive outlook.
With central banks likely to maintain accommodative policies due to slowing growth, non-yielding assets like gold are expected to remain attractive. Overall, Commerzbank’s strategists believe that the combination of factors, including macroeconomic uncertainty and currency fluctuations, will support a positive outlook for gold in the coming year.
