Press release
World Gold Council Unveils Gold Outlook
Based on Different Fed Rate Scenarios and Economic Factors
Gold remains one of the best performing assets of 2024,
reports Gold Mid-Year Outlook 2024
Bangkok, 4th September 2024 – The World Gold Council (WGC) shares its analysis based on QaurumSM and WGC’s Gold Valuation Framework, suggesting that if the global economy and interest rates align with current market expectations, gold may continue to find support from investment demand.
The released Mid-Year Outlook also highlights that gold has outperformed most major asset classes in 2024. By the end of June 2024, gold had risen by 12%, and reaching nearly a 15% surge by the end of August. This strong performance in first half of H2 occurred despite high global interest rates and a strong US dollar—a combination often seen a hostile environment for gold.
There are various reasons gold may continue to outperform. WGC has started to see renewed interest from these investors as suggested by inflows into gold ETFs in Europe since May and since July in the US. A drop in interest rates combined with continued geopolitical risk could help further support this trend.
Juan Carlos Artigas, Global Head of Research, World Gold Council, said: “Like the global economy, gold appears to be waiting for a catalyst. This may come in the form of Western investment flows as interest rates fall or from a further increase in risk metrics. And while gold’s outlook is not without challenges, there is growing appetite for gold in asset allocation strategies,”
“With the global economy in a transitional state, investors want to know whether gold’s momentum can continue or if it is running out of steam. The market used to focus solely on interest rates and the US dollar to inform their perception of gold. Through that lens, developments during the first half of 2024 should have significantly dented gold’s performance – and yet we’ve had record highs and strong performance throughout Q2,” he added.
The WGC expects central bank demand to remain above trend this year, a view that is shared by Metals Focus. This is supported by WGC’s recent central bank survey which shows that gold reserves managers retain a positive outlook towards gold. There are, however, reported deceleration in purchases from some central banks including the People’s Bank of China (PBoC).
Asian investors have also been important contributors to gold’s recent performance. This has been evident through bar and coin demand, and gold ETF flows in Q2 2024.
Shaokai Fan, Global Head of Central Banks & Head of Asia-Pacific, commented: “Thailand’s consumer gold demand rose 20% year-on-year in Q2 2024 to 9 tonnes, showing the highest percentage growth among Southeast Asian countries for the quarter, despite soaring prices. Global gold demand also increased 4% y/y to 1,258 tonnes, marking the strongest Q2 in our record. Looking ahead, the question is: what will be the catalyst to keep gold front and centre in investment strategies? With a long-awaited rate cut from the US Fed on the horizon, inflows into gold ETFs have increased thanks to renewed interest from Western investors. A sustained revival of investment from this group could change demand dynamics in the second half of 2024”
Gold’s performance in a given economic scenario is driven by the interaction of the four key drivers
In summary, gold may remain rangebound if the Fed takes longer to cut rates. However, there’s a clear path for gold to outperform from here, likely fuelled by Western flows. Conversely, in the event that central bank demand drops drastically, rates remain high for longer and Asian sentiment flips, investors could see a pullback in the second half. WGC’s analysis shows that gold plays a key role as a diversifier and source of liquidity, coupled with its positive long-term returns.
Table: Economic scenarios and factors that impact gold based on four key drivers*
*As of 30 June 2024. Based on market consensus and other indicators from Bloomberg and Oxford Economics. Size of gold drivers represents relative importance within each scenario. Impact on gold performance based on average annual prices as implied by the Gold Valuation Framework. Source: World Gold Council
– END –
For further information please contact:
Maetavarin Maneekulpan, TQPR Thailand, T:02 260 5820 E: mae@tqpr.com
World Gold Council
We are a membership organisation that champions the role gold plays as a strategic asset, shaping the future of a responsible and accessible gold supply chain. Our team of experts builds understanding of the use case and possibilities of gold through trusted research, analysis, commentary, and insights. We drive industry progress, shaping policy and setting the standards for a perpetual and sustainable gold market.
You can follow the World Gold Council on X (Twitter) at @goldcouncil and LinkedIn.
Disclaimer
Important information and disclaimers
© 2024 World Gold Council. All rights reserved. World Gold Council and the Circle device are trademarks of the World Gold Council or its affiliates. All references to LBMA Gold Price are used with the permission of ICE Benchmark Administration Limited and have been provided for informational purposes only. ICE Benchmark Administration Limited accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced. Other content is the intellectual property of the respective third party and all rights are reserved to them.
Reproduction or redistribution of any of this information is expressly prohibited without the prior written consent of World Gold Council or the appropriate copyright owners, except as specifically provided below. Information and statistics are copyright © and/or other intellectual property of the World Gold Council or its affiliates or third-party providers identified herein. All rights of the respective owners are reserved.
The use of the statistics in this information is permitted for the purposes of review and commentary (including media commentary) in line with fair industry practice, subject to the following two pre-conditions: (i) only limited extracts of data or analysis be used; and (ii) any and all use of these statistics is accompanied by a citation to World Gold Council and, where appropriate, to Metals Focus or other identified copyright owners as their source. World Gold Council is affiliated with Metals Focus.
The World Gold Council and its affiliates do not guarantee the accuracy or completeness of any information nor accept responsibility for any losses or damages arising directly or indirectly from the use of this information.
This information is for educational purposes only and by receiving this information, you agree with its intended purpose. Nothing contained herein is intended to constitute a recommendation, investment advice, or offer for the purchase or sale of gold, any gold-related products or services or any other products, services, securities or financial instruments (collectively, “Services”). This information does not take into account any investment objectives, financial situation or particular needs of any particular person.
Diversification does not guarantee any investment returns and does not eliminate the risk of loss. Past performance is not necessarily indicative of future results. The resulting performance of any investment outcomes that can be generated through allocation to gold are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. The World Gold Council and its affiliates do not guarantee or warranty any calculations and models used in any hypothetical portfolios or any outcomes resulting from any such use. Investors should discuss their individual circumstances with their appropriate investment professionals before making any decision regarding any Services or investments.
This information may contain forward-looking statements, such as statements which use the words “believes”, “expects”, “may”, or “suggests”, or similar terminology, which are based on current expectations and are subject to change. Forward-looking statements involve a number of risks and uncertainties. There can be no assurance that any forward-looking statements will be achieved. World Gold Council and its affiliates assume no responsibility for updating any forward-looking statements.
Information regarding QaurumSM and the Gold Valuation Framework
Note that the resulting performance of various investment outcomes that can be generated through use of Qaurum, the Gold Valuation Framework and other information are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. Neither World Gold Council (including its affiliates) nor Oxford Economics provides any warranty or guarantee regarding the functionality of the tool, including without limitation any projections, estimates or calculations.