Goldman Update: Gold Stands Alone

We remain constructive on gold with our 12m target unchanged at $2,175/toz.

Bottom Line: GS believes geopolitical risks will keep Gold underpinned. Then when rate cuts come, Gold will have considerable upside as real rates drop and the USD softens.

Intro:

Goldman Sachs updates its 2024 Commodity report as the year starts. Gold as it happens, remains their only real recommendation when one drills into the report.

Contents— Our Comment

1. Gold— The only one

2. Commodities outlook— See You in June

3. Oil— Home on the range

4. Copper— Nope

5. Natural gas/European energy crisis— Less likely than last year

6. Policy— China, Iran, ESG

7. Full Analysis

8. Previous Analysis

1- Gold.

Goldman Clients Ask:

How should we think about the dynamics which will drive the gold price higher with the reprice¹ that has already occurred in US rates?

Here is their answer:

Over the past month, gold prices have moved closely with US real rates driven by the December Fed pivot. Gold remains an attractive asset in current macro setting where a decline in real rates boosts gold demand on falling opportunity cost of holding gold and higher rates can lead to a haven bid, in our view.

Whilst December core CPI rose slightly above expectations, the market expectations of an easing cycle in 2024 remain in place and are largely reflected in the gold price, and participants are now focused on catalysts which can drive gold prices higher.