In 2024, the gold market has witnessed a remarkable upsurge, achieving a historic milestone with prices soaring to a new record high of $2,483.35. Despite facing resistance around the $2,480 mark on multiple occasions, market experts anticipate an inevitable breakthrough beyond $2,500 in the near future.
Scott Bauer, CEO of Prosper Trading Company, highlighted the volatile nature of the metals market throughout the year, with gold, silver, and copper leading the charge. He emphasized the positive outlook for both precious and industrial metals, attributing the surge to soaring demand for gold and silver, while noting a divergence in the performance of copper.
Bauer underscored the key driver of this bullish trend in precious metals as the widespread anticipation of interest rate cuts by the Federal Reserve. Market expectations, as indicated by the CME FedWatch Tool, reflect a 100% likelihood of a rate cut in September, with further cuts in November and December also heavily priced in.
Traditionally viewed as inflation hedges, commodities like gold, silver, and copper have seen a surge in demand amidst a weakening U.S. dollar. Bauer explained that as the dollar depreciates, commodities become more attractive investments due to increased purchasing power, driven by the basic economic principle of supply and demand.
Delving into the specifics of copper, Bauer highlighted the metal’s recent price fluctuations following a peak in May, driven by increased demand in AI chip production and electric vehicle manufacturing. However, concerns surrounding global technology stocks and the growth of the AI industry have cast a shadow on copper’s outlook, particularly with China’s economic recovery showing signs of strain.
Shifting focus back to gold, Bauer emphasized lower interest rates and ongoing geopolitical uncertainties as tailwinds propelling the yellow metal’s trajectory. He pointed out the rise in market participants turning to gold as a safe haven asset, alongside record-level gold purchases by central banks globally, with China leading the way.
Regarding silver, Bauer noted its utility in emerging technologies, driving a surge in demand and a substantial deficit in supply. Highlighting the gold/silver ratio as a key indicator, Bauer suggested that silver’s undervaluation relative to gold historically precedes significant rallies, signaling potential upside for silver in the coming period.
In conclusion, Bauer forecasted a positive momentum for gold and silver, fueled by the prospect of interest rate cuts and ongoing geopolitical events, while suggesting that copper’s performance may lag behind due to its ties to Chinese economic data.
