Gold prices hit record highs, will the rally continue? Experts weigh in

Gold prices achieved new record highs this week, both on a global scale and in India. In the midst of the peak wedding season in India, gold prices have reached an unprecedented ₹64,000 per 10 grams.

However, Philip Newman, Managing Director at Metals Focus, predicts a gradual weakening of gold, projecting it to move towards $1,900 per ounce and eventually head back to the $1,800 level in 2024.

“At this point in time, we see no reason why the Fed will alter its course of remaining hawkish for much of 2024. So we don’t think interest rates will be cut until very late next year. So under that scenario, as the market moves towards the Fed's position, we think you will see liquidations by investors and then that will gradually weigh on the prices. So we think gold will gradually weaken and head towards $1,900 per ounce and then head back towards $1,800 level as we move through 2024,” Newman told CNBC-TV18.

Over the past year, gold prices have surged by 20% globally, driven by factors such as a weakened US dollar and expectations of interest rate cuts by the Fed.

Ole Hansen, Head of Commodity Strategy at Saxobank, notes that market participants are currently factoring in five interest rate cuts by the Fed in the coming year, a challenging expectation that could expose the market to disappointment. Despite the expected volatility, Hansen remains optimistic about the potential for higher gold prices in 2024.

While the yellow metal has seen a remarkable 600% increase since the start of the millennium, it remains below its inflation-adjusted peak of $850 in January 1980, equivalent to over $3,000 in today's dollars.

Hansen predicts a target of $2,300 per ounce for gold in 2024, a level he believes could be easily reached.

The demand for the safe-haven asset is also boosting silver prices, which are currently near a 7-month high. In India, silver prices have surged by 25% in the past year.

Michael DiRienzo, Executive Director at The Silver Institute, attributes the increased demand for silver to the industrial sector. He expects record demand for industrial silver in the current year, driven by significant investments in photovoltaic technology, power grids, 5G network infrastructure, consumer electronics, and the rise of electric and hybrid vehicles.

DiRienzo anticipates a 6-8% increase in the average silver price this year, surpassing $43.10. With silver currently at around $25 and having risen by 8% year on year, he is confident that this positive trend will continue into 2024.