The World Gold Council (WGC) has published its Mid-Year Outlook Report for 2024 and indicated that the gold market remains resilient amid geopolitical uncertainty, but its longer-term fundamentals will be determined by events of the second half of the year.
“For gold, we believe the catalyst could come from falling rates in developed markets, that attract Western investment flows, as well as continued support from global investors looking to hedge bubbling risks amid a complacent equity market and persistent geopolitical tensions,” WGC analysts said.
The gold market rally saw the prices increase 12% year to date, with yellow metal outpacing most major asset classes.
Such historic factors as interest rates and the US dollar seem to have had lesser effect than usual on gold in the first half of the year, and should have significantly dented its performance. However, gold has thus far benefitted from continued central bank buying, Asian investment flows, resilient consumer demand, and a continued geopolitical uncertainty.
Investment in gold, particularly through Exchange Traded Funds (ETFs), has surged, reflecting a growing confidence among investors in gold as a means to retain value during economic turbulence. Retail gold jewellery market performance was mixed due to regional economic conditions and fluctuating prices.
Still, WGC’s outlook for the gold market remains cautiously optimistic amid continued wider uncertainty, which bolsters the metal’s status as a safe haven asset. Price risks come from a reduction in central bank buying and the fall in Asian demand.
“Gold’s outlook is, of course, not without risks. A sizable drop in central bank demand or widespread profit-taking from Asian investors could curtail its performance. As it stands, however, global investors continue to benefit from gold’s role in robust asset allocation strategies,” WGC concluded.
Theodor Lisovoy, Editor in Chief, Rough&Polished
