Muzhu Mining Ltd. (CSE: MUZU)
Creating lasting wealth by developing gold and silver properties with near-term mining potential
After the price of gold hit a record high in the last month of 2023, more and more analysts turn bullish for the precious metal. Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said gold prices are expected to hit new highs in 2024 and may even reach $3,000 an ounce as macroeconomic conditions continue to deteriorate.
In his 2024 Global Commodity Outlook report, he noted that gold has outperformed most commodities and the S&P 500 year-on-year through 29 November last year. If a U.S. recession becomes a reality in 2024, gold is expected to turn resistance at $2,000 an ounce into support, copper could move toward $3 a pound, and WTI crude oil could approach $40 a barrel.
McGlone noted that gold has led commodities this year while the Bloomberg Commodity Spot Index has been at the bottom, suggesting that the market is heading for a global recession. The impact of coordinated interest rate hikes by central banks in 2023 may not be fully felt until the third quarter of 2024, and the U.S. stock market may need to remain resilient or deflation could dominate a year from now.
Another sign of a global recession, the report notes, is that the energy sector ranked at the bottom of Bloomberg’s annual performance of the commodities sector, while the precious metals sector ranked at the top. If U.S. stocks can avoid a crash in 2024 and economic growth in Europe and China rebounds from a downturn, commodity prices could stabilize in 2024. The downside of the typical commodity cycle and the Fed remaining focused on higher interest rate levels for longer could make gold outperform in 2024.
Bloomberg Intelligence’s expectation is that rising gold prices and falling oil prices will likely be one of the main trends in 2024, while high interest rates and equity prices will be the biggest headwinds facing gold prices in 2024. Central banks will likely continue to buy gold aggressively until higher prices dampen demand. Precious metals outperformed industrial commodities during the recession in the U.S.
Another sign that gold is gearing up for a bull market in 2024 is that gold ETFs saw fewer outflows in the fourth quarter compared to previous years.
Strategists note that gold ETFs usually see outflows in the fourth quarter, but surprisingly bucked the trend in 2023 and had an impact on the price. The charts suggest that one of the major headwinds to the gold price – the ETF sell-off – may be reversing.
McGlone added that if US unemployment continues to rise, the price of gold per ounce, at a discount of about 50 per cent to the S&P 500, is ripe for a move back higher. Since the U.S. abandoned the gold standard in 1971, gold has typically outperformed equity indexes when the price of gold is lower and unemployment is rising. A normal pullback in equity prices could be the catalyst for a gold rally.
