Gold could soar above $3,000 - Bloomberg

It is anticipated by Gazprombank that the price of gold will rise to $2,300 by 2024.

The price of the precious metal can be affected by numerous factors.

Should the S&P 500/gold ratio drop into the mid-range, it is possible that prices could go above $3,000.

Gazprombank has predicted that gold prices will reach a new all-time high of $2,300 per ounce by the end of 2024, according to RBC. This follows the record-breaking price of $2,152.3 per ounce set on December 4.

Demand for gold in 2024 is expected to be driven by increased purchases from global central banks and consumers buying jewelry. Last year, demand from central banks in developing countries doubled due to Western sanctions against Russian Central Bank reserves.

The market anticipates the commencement of a policy easing cycle, beginning with the US Federal Reserve and then followed by other major central banks. All three of the Fed's recent rate cut cycles (in 2000, 2007 and 2019) were associated with a 30-40% rise in the price of gold.

Gazprombank experts consider the persistence of geopolitical tensions as a positive factor for gold prices in the base scenario. However, they recognize that progress in resolving conflicts could be a potential risk.

Since 2020, gold has maintained a relatively steady trajectory. Despite global events such as the coronavirus pandemic, inflation spikes, and subsequent increases in interest rates, the effect on stock prices has been minimal.

Today, gold is stable due to its diverse sources of demand, which include being an investment and speculative asset, a hedging instrument, a luxury good, and an industrial metal.

Bloomberg Economics notes that the S&P 500/gold ratio is currently at 2.35x, while its median value since 1927 is around 1.4x.

Should the S&P 500 stay at its present value or drop to 4,200 points, the return of this ratio to its usual level would result in gold prices rising to between $3,000 and $3,400 per ounce.