Gold Market Upswing

The gold market is poised for a potential rise above $2,100 an ounce through 2024, according to TD Securities' outlook. They predict gold prices averaging around $2,019 an ounce for 2024, expecting a push to $2,100 by the second quarter. Despite inflation staying above the Federal Reserve's target, the analysts anticipate a restrained breakout due to the Fed's cautious approach toward easing.

Persistent inflation might compel the Fed to keep rates high, leading to a possible recession by mid-2023, prompting a significant rate cut. TD Securities anticipates a 250-basis point cut by the Fed, differing from market expectations of a 100-basis point cut.

The bank foresees a shift in investor interest when the Fed hints at a less stringent policy, potentially triggering a surge in gold demand. Additionally, they expect continued gold purchases by central banks to support prices in 2024.

Central bank gold demand has been robust, led by China, Poland, Singapore, and India, with purchases surpassing 800 tonnes in the first nine months of the year. TD Securities suggests monitoring Chinese demand, highlighting the potential for significant gold acquisitions given the low representation of gold in China's FX reserves compared to other geopolitical competitors like the US, Germany, Russia, and India. If China were to increase its gold reserves to just 10%, it could mean an additional purchase of over 3,000 tonnes.