AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
Aakash Doshi, head of North American commodities research at Citi, said in a recent interview with CNBC that the price of gold is likely to reach $3,000 per ounce in the next 12 to 18 months. Citibank sees the precious metal averaging $2,150 per ounce in the second half of 2024, likely to hit a new record by the end of 2024.
Prior to that, analysts at Bank of America issued a similarly bullish forecast, saying gold prices could reach $2,400 an ounce this year.
Doshi said the bullish forecast for gold is based first and foremost on the frenzied buying demand from central banks. The acceleration of de-globalization trend is prompting countries to diversify their foreign exchange reserves, which could lead to a crisis of confidence in the dollar and prompt central banks to accelerate gold purchases.
According to a January report by the World Gold Council, central banks have made net purchases of more than 1,000 tonnes of gold for two consecutive years. Analysts point out that if this figure doubles again, it will constitute significant support for the price of gold.
Another catalyst that could push gold up to $3,000 is the “global deep recession”, which may stimulate the Federal Reserve to quickly cut interest rates. Doshi believes that the U.S. federal benchmark interest rate may fall to 1% or even lower, which will support the price of gold up to $3,000.
Gold prices tend to be inversely related to interest rates. As interest rates fall, gold becomes more attractive compared to fixed-income assets such as bonds, which offer lower returns in a low-interest-rate environment.
The third catalyst is stagflation, i.e. rising inflation, slower economic growth and rising unemployment. As gold has always been seen as a safe haven, it tends to perform well in times of economic uncertainty when investors stay away from risky assets such as equities.
In its report, Citibank also noted that oil prices could return to triple-digit levels again. Doshi said the catalysts for a surge in oil prices to $100 a barrel include rising geopolitical risks, further OPEC+ production cuts, and supply disruptions in major oil-producing regions.
The ongoing Israel-Hamas war has not hit oil production or exports, with the only major impact being Houthi attacks from Yemen on oil tankers and other vessels crossing the Red Sea. Citi analysts note that major oil producer Iraq has been affected by the conflict and any further escalation could hurt other major OPEC+ suppliers in the region.
