ABN Amro Maintains $2,000 Year-End Target

ABN Amro has issued a cautious forecast regarding gold prices through the end of 2024, maintaining its year-end prediction at $2,000 per ounce. Currently, gold is priced at $2,327.28. In her latest report, Georgette Boele, Senior Economist in Sustainability at the bank, discusses various factors influencing both current gold prices and future trends.

“Gold prices peaked earlier this year but have since lost momentum,” Boele stated. The report indicates that traditional correlations that typically influence gold prices have become less relevant, resulting in a more complex and uncertain market landscape.

### Central Bank Policy and US Real Interest Rates

Boele noted that expected easing measures from central banks have not supported gold prices as anticipated. While the European Central Bank initiated easing in June, the US Federal Reserve is not expected to cut rates until September. “This year, expectations for US monetary policy easing have diminished, which suggests that gold prices should have decreased rather than increased,” she explained.

Additionally, the typical relationship between US real interest rates and gold prices has shifted. Boele highlighted that despite rising US real interest rates, gold prices have also increased. Normally, higher real interest rates would suppress gold prices.

### US Dollar and Physical Gold Supply

The strength of the US dollar, which has appreciated by approximately 5% against a basket of currencies this year, generally puts downward pressure on gold prices. However, Boele pointed out that gold prices have risen nearly 11% during this time, contradicting the expected inverse relationship.

Concerns about a physical gold shortage, which had surfaced during the COVID crisis, are not justified in the current market, according to Boele. “There is no shortage. Premiums for gold coins remain below long-term averages, and some coins even have negative premiums.”

### Investor Activity and Market Sentiment

Investor behavior presents a mixed scenario. While investors in exchange-traded funds (ETFs) have reduced their positions to levels seen in 2019, speculative positions in the futures market have increased. Boele explained, “The rise in speculative positions in the futures market may have counteracted some of the effects of ETF position liquidations.”

According to Boele, key drivers contributing to the rise in gold prices this year include futures market purchases, central bank buying—particularly from China—and a positive technical outlook that encourages trend buying.

### Gold Price Outlook

ABN Amro takes a cautious approach to the future of gold prices. Though the current trend is positive, momentum appears to be slowing. The unusual relationship with the US dollar and US real interest rates is viewed as temporary. “If gold prices adjust based on central bank expectations, we anticipate stability against the US dollar and a slight increase against the euro,” Boele forecasts.

Given the absence of a physical gold shortage and the fact that central bank purchases do not justify the current price levels, the bank’s prediction remains at $2,000 per ounce for December 2024.

Technically, Boele identifies a support zone between $2,220 and $2,275, which is significant due to overlapping previous highs and lows. “If prices drop below this range, we then look to the next support level at $2,115, where the 200-day moving average lies. A decline below the 200-day average could indicate a shift to a negative long-term trend.”