According to miningWhile the market performance in 2023 has been surprising, beating expectations in the face of rising interest rates and commodities, bonds and most cases, the World Gold Council (WGC) still believes there are still strategic investment opportunities in 2024, com** reported.
In its 2024 market outlook released on the 7th, the WGC said that next year will be a critical year, with elections in many important economies, geopolitical tensions, and continued purchases by central banks, which will also provide support for this yellow metal.
In addition, the Fed hopes that the U.S. economy will land safely above 5%, so a global recession is still a possibility. This will spur many investors to hold effective hedging instruments such as ** in their portfolios, the report said.
According to the WGC report, there are three possible scenarios for the global economy to affect the market in 2024:
The first is that the market expects the Fed to guide a "soft landing", which the WGC believes is an outcome that many investors have welcomed. However, achieving a soft landing requires decision-makers to be quick and decisive, and there are many other factors that they cannot directly control.
That's why a soft landing is considered to require a lot of courage. Historically, in the nine tightening cycles that have occurred over the past 50 years, the US central bank has implemented only two soft landings. The other seven have brought about a recession or a "hard landing", the second scenario.
Whether the economy will change from a soft to a hard landing depends on the labor market. While the U.S. unemployment rate remains low, some of the factors that have kept it up and down in 2023 have not only been eliminated but are on track to accelerate the shift, such as a lack of labor** and an abundance of cash from consumers, which has led to strong corporate balance sheets.
The third scenario, the low probability of a "non-landing", is reflected in the acceleration of inflation and economic growth in the United States, driven by the recovery in manufacturing and real wages. However, the WGC sees it as not an outcome but more of a temporary state, which Morgan Stanley describes as "not landing just waiting for a soft or hard landing".
Historically, the first and third scenarios could have led to a flat or slightly lower gold price next year, according to the WGC. However, there are two other factors affecting the market this time, namely geopolitical risks and central bank demand.
In addition, a recession is unlikely. The report concludes that from a risk management perspective, this provides strong support for the best strategic allocation in the portfolio.
*: Ministry of Natural Resources.