Shocking Assumptions: Gold Might Be At These Levels in 2022, 2023 and 2024!

The gold market is struggling to maintain a balanced upward momentum, under the burden of rising interest rates. This caused a Canadian bank to lower its forecast for gold and silver.

BMO Capital Markets lowers gold and silver assumptions

Koindeks.com As you can follow, gold prices fell sharply under the pressure of rising interest rates. In the latest commodities update, BMO Capital Markets analysts slashed 2023 gold price claims by 6%. In this context, the Bank announced that they kept the annual average around $1,649. For 2024, it predicts prices to average $1,615, down 4% from the previous forecast.

In addition, the Bank expects the yellow metal to continue to strive at these levels through 2024. However, the Bank’s long-term gold price forecast remained unchanged at around $1,400.

Analysts predict silver prices will be around $19.9 next year, down 11% from the previous forecast. Hence, BMO is more bearish on silver. In addition, the Bank expects silver prices to be around $21.4, down 3% for the 2024 average compared to the previous claim. In the long run, the Bank claims silver prices will be around $20.00. Analysts say rising calm concerns will continue to weigh on silver over the next two years. In this context, they make the following assessments:

Appetite for trades in the stock market has waned as broader macro headwinds weigh on industrial demand and increasingly hawkish central bank rhetoric. This, in turn, helped boost silver’s relatively poor performance compared to gold.

“Everything is not so bad for precious metals”

In the long run, however, the bank remains optimistic that industrial demand and rising solar power demand will provide a long-term basis for silver. Analysts think industrial silver demand will benefit from the rollout of 5G infrastructure, increased MESKEN penetration rates, continued strength in consumer electronics, medical wearables and accelerating solar power generation capacity additions. Based on this, analysts note the following:

Since our last quarterly rollover, we have removed our renewable generation capacity addition. We now expect industrial silver demand, including photography, to increase by 154Moz (from 117Moz in the previous update) by 2030 compared to 2021 levels.

As we mentioned at the beginning, the Bank lowered its gold assumption. However, analysts think the increased economic uncertainty will provide some measure of reinforcement. Therefore, they say they do not see a full breakdown in price action. They explain their views as follows:

In the near term, increasingly restrictive monetary policy will likely weigh on gold. But the ostensibly increasing economic persecution will help support prices. To be convinced that material prices are on the upside, we need to see macro asset allocators turn gold again, which could be caused by inflation settling, heightened geopolitical tensions, the dollar rolling from decades-highs, or fluctuations about calm.

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