Gold prices set to rise further on global uncertainty

Gold prices will continue to rise in 2024 and may hit $US3000 an ounce over the next weeks, according to Emanuel Datt, chief investment officer at boutique Australian equity investment manager, Datt Capital.

Gold touched $US2700 an ounce this month*. As gold prices push to all-time highs there are several factors that will further propel its ascendancy,” Datt said.

Firstly, gold prices have rallied partly due to expectations that the Federal Reserve would cut interest rates in 2024. Lower interest rates typically increase the appeal of non-yielding assets like gold.  The Fed’s 50 basis point cut in September also buoyed the price of gold,” he added.

Additionally, gold is often seen as a hedge against inflation and currency depreciation. So as inflation concerns and persistent monetary stimulus continue globally, investors are turning to gold to protect their future purchasing power.

The concerns around the upcoming U.S. presidential election, combined with the escalating conflicts in the Middle East, are also major factors as they push investors into safe haven assets like gold,” Datt said.

There has also been significant demand for gold from central banks, particularly from China, as countries seek to diversify their reserves away from the US dollar amid concern about the U.S. election outcome.

“For investors, gold is a highly effective portfolio diversifier due to its low to negative correlation with all other major asset classes. Gold protects an investment portfolio from volatility because factors that impact the returns of most asset classes do not significantly influence the price of gold. Local investors may benefit from strong gold prices by taking positions in unhedged gold producers across the risk spectrum,” Datt said.

In terms of which companies to invest in to take advantage of higher and rising gold prices, Datt suggests large cap producers like Newmont (NEM), Northern Star (NST) and Evolution Gold (EVN).

“The Australian mid cap producers we favour are Westgold (WGX), Vault Minerals (VAU) and Ramelius (RMS). At the smaller and risker end of the market, we favour gold explorers such as Predictive Exploration (PDI), Turaco Gold (TCG) and Yandal Resources (YRL),” Datt said.