Gold prices to breach all-time highs? Some expect bullion to hit $2,500

Gold prices are connected way to rally to all-time highs successful 2024 connected the backmost of tapering involvement rates, and looming recessionary fears that elevate its relation arsenic a harmless haven asset.

Spot golden prices deed a grounds intraday precocious of $2,072.5 connected Aug. 7, 2020, according to information from Refinitiv. Analysts who spoke to CNBC accidental they could surpass that level and propulsion beyond the record.

"I bash spot golden determination supra $2,100 successful precocious 2023, aboriginal 2024 arsenic a trading level," said TD Securities' managing manager and planetary caput of commodity strategy, Bart Melek, attributing his optimism to a imaginable intermission successful the U.S. Federal Reserve tightening cycle.

"I americium affirmative connected golden arsenic I judge that the Fed volition tilt argumentation distant from its existent restrictive mode. This I judge volition hap earlier the 2% ostentation people is reached," Melek told CNBC successful an email.

Spot gold was past trading astatine $1,912.26 per ounce.

The Fed began its dependable watercourse of rate hikes successful March 2022, arsenic inflation climbed to its highest successful 40 years. In little than 2 years, it has raised borrowing costs to betwixt 5.25% to 5.5%.

Gold has outperformed astir different large plus classes successful the past 12 months, Melek wrote successful a caller report, attributing it to the yellowish metal's quality to defy rising involvement rates and its worth arsenic a harmless stake against inflation. 

Some analysts are peculiarly bullish connected gold, and person called for a people of $2,500 by the extremity of adjacent twelvemonth — that's much than 26% higher than existent levels.

"My people is $2,500 by the extremity of 2024 … Much of this has to bash with the information that recessionary forces whitethorn instrumentality clasp opening aboriginal this twelvemonth and summation steam successful 2024," said David Neuhauser, laminitis of Livermore Partners. "2024 is erstwhile I spot golden breaking retired and reaching caller highs and beyond."

Neuhauser said helium expects stagflation to persist successful the planetary system for the adjacent fewer years arsenic ostentation falls to betwixt 3% to 5%.

Can golden deed $2,500?

Gold tends to perform good successful periods of economical uncertainty specified arsenic recessions and stagflation owed to its presumption arsenic a reliable store of value, and is often utilized arsenic a hedge against inflation.

"I'm beauteous assured that wrong a mates of years, we volition spot $2,500 gold," said CEO of Wheaton Precious Metals, Randy Smallwood.

"Any benignant of recessionary determination would beryllium affirmative for gold," helium said, adding that he's seeing weakness successful the Chinese and U.S. economy.

UOB besides forecasts that golden prices volition acceptable caller records, but lone by the 2nd fractional of 2024.

"Key operator successful our affirmative outlook for golden is anticipated highest successful Fed complaint hiking rhythm arsenic good arsenic upcoming topping retired of US Dollar strength," Heng Koon How, the bank's caput of markets strategy, planetary economics and markets research, said successful an email.

Gold should commercialized higher erstwhile involvement rates halt rising and the greenback retreats, helium explained.

Heng predicted that golden volition commercialized astatine $2,100 per ounce by the 2nd 4th of 2024.

Gold prices thin to person an inverse narration with involvement rates.

As involvement rates rise, request for golden drops arsenic alternate investments similar bonds go much appealing and output amended returns.

U.S. ostentation fell to its lowest yearly rate successful much than 2 years successful June, rising conscionable 0.2% connected a monthly basis. The Federal Reserve successful July approved a much-anticipated involvement complaint hike that took benchmark borrowing costs to their highest successful much than 22 years.

Central slope purchases of golden person been "consistently strong," alongside user request for the precious metal, Heng pointed out.

"We besides spot a instrumentality of carnal golden jewelry request from China and India arsenic some economies stabilize and retail spending returns," Heng said.

Chinese retail golden request has been resilient successful 2023 adjacent arsenic depletion of different commodities remained weak, Citi said successful a July report. 

First 4th golden jewelry request successful China was "just shy of 200t, the strongest seasonal since 2015," analysts led by Citi's Head of Commodities Strategy Aakash Doshi said successful the report.

Citi projects much than 700 ton of jewelry request from China this year, marking a 22% year-on-year increase, it said.

Wheaton's Smallwood said he's seen an summation successful user and retail demand. "Whether it's jewelry, whether it's bars, whether it's coins. We person seen a pickup successful that," helium said.

BRICS countries, namely Brazil, Russia, India, China and South Africa, are besides reportedly looking astatine moving distant from the U.S. dollar to a caller currency backed by gold.