Gold would take hit in U.S. ‘soft landing’ but plenty of risks remain, WGC says

Gold prices likely would suffer if the U.S. economy achieves a soft landing next year and avoids a recession, despite rising inflation and interest rates this year, the World Gold Council said this week in its 2024 gold outlook.

But the WGC is not confident that a soft landing is inevitable and said a mild recession is still very much a possibility – “It’s not going to be a straight line,” WGC chief market strategist John Reade told Dow Jones this week.

Gold likely will rise when the Federal Reserve lowers interest rates, Reade said, in “a reflection of how important U.S. monetary policy and the U.S. economic outlook is to gold.”

The market currently is pricing in roughly five rate cuts for next year, according to Reade, saying investors should be able to position for gold when the Fed starts to cut.

Reade said physical gold buying would take a hit if prices remain volatile, especially in places such as India, the Middle East and China where physical buyers of gold are more price sensitive.

Front-month gold futures traded at a record high $2,152/oz on December 4 but wound up falling for the week, -3.5% to $1,998.30/oz.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ)

At Barron’s, Ben Levisohn thinks it might be “time to buy gold again for the long run,” pointing to various emerging signs that a period of outperformance is taking shape.

Among many factors, Levisohn noted that gold’s recent rally began on October 6, the day before Hamas attacked Israel, and if the world continues to add more flashpoints to an already a combustible mix, gold could continue to rise, Levisohn said.