Gold prices are encountering new resistance at $2,400 per ounce, but analysts at Sucden Financial remain optimistic about the metal’s future prospects. In a report released Thursday, the brokerage firm projected that gold could surpass $2,500 per ounce by the end of the third quarter of 2024.
Sucden Financial’s analysts attributed this positive outlook to sustained physical demand, robust central bank purchases, easing inflation, and heightened market volatility. These factors contribute to a generally favorable environment for gold, despite current resistance levels.
Silver also remains a focal point for Sucden, even as it struggles to maintain support above $29 per ounce amid gold’s upward trend. The analysts forecast that silver will gain attractiveness both as a safe-haven asset and an essential industrial metal. They anticipate that silver prices will exceed $32 per ounce by the end of Q3 2024.
A key factor driving expectations for precious metals is the anticipation of a Federal Reserve interest rate cut in September. With U.S. economic growth proving resilient and inflation pressures easing, the Fed has room to lower rates. The CME FedWatch Tool indicates that a rate cut is nearly fully priced in by the market.
“Although the rate cut is largely anticipated, the actual decision would provide reassurance about future rate directions, encouraging sustained investor inflows,” the analysts noted.
For gold, Sucden expects the uptrend to be supported by ongoing geopolitical uncertainties that drive demand for physical safe-haven assets. The firm also predicts strong consumer demand from critical markets like India, which accounts for 20% of global gold consumption.
“India’s strong economic growth and gold’s established role as a store of value will support the precious metal,” the analysts said.
Additionally, central banks are expected to continue their gold purchases through 2024, albeit at a slower pace compared to recent record levels.
Regarding silver, Sucden is bullish due to increasing industrial demand, particularly driven by advancements in artificial intelligence (AI). The rapid expansion of generative AI is expected to require substantial upgrades to infrastructure and hardware, boosting silver demand.
“The growth of AI will lead to significant increases in demand for advanced semiconductors, data centers, and consumer electronics,” the report stated. “The International Energy Agency (IEA) projects that power demand from data centers will exceed 1,000 terawatt-hours (TWh) by 2026, comparable to Japan’s total power consumption and nearly double the data center usage in 2022. This surge underscores silver’s critical role and potential for price increases as the AI revolution progresses.”
