Will prices remain elevated?
Since the high of Dec 4, the price of gold has gradually declined. As of Monday, it was trading at just under US$2,000 per ounce.
So where could prices go from here?
Mr Chwee said that even though markets expect the Fed to begin cutting interest rates in March 2024, OCBC does not expect this to happen until June 2024.
“This will support gold prices, though there could be some weakness if the Fed doesn’t cut rates in March 2024 as markets currently expect,” he said.
“We expect gold prices to remain elevated for the next six months,” he added.
Mr Heng Koon How, head of market strategy at UOB, said he forecasts gold prices to rise further to US$2,200 per ounce by the fourth quarter of 2024.
“This is based on our core view that the US Fed will start cutting rates gradually across (the second half of 2024) and the US dollar will be softer as well,” he said.
Going into 2024, the US presidential election and ongoing geopolitical tensions are likely to see more people turn towards precious metals, Mr Gregersen said.
“About a quarter of central banks also indicated their intention to increase their gold reserves further in 2024,” he added.
Mr Goh said: “Whether or not gold continues to rally will depend on the trajectory rates. If inflation continues to moderate and the Fed implements rate cuts next year, then gold will likely trend higher from here.”
“However, if there is a resurgence in inflation and the Fed is forced to hike rates further, we expect gold to retrace some of its recent gains,” the DBS analyst added.
Should retail investors consider investing in gold?
Describing gold as a “good portfolio diversifier of risk”, Mr Heng said: “It is good from a long-term diversification point of view to allocate some gold into the portfolio.”
Silver Bullion’s Mr Gregersen said that it is a good time to buy metals, sharing that Silver Bullion saw a 300 per cent increase in sales volume last week.
“Physical gold mitigates counterparty jurisdictional and currency risks while reliably appreciating over the long term,” he said.
“It is a great choice in uncertain times.”
Mr Goh and Mr Chwee, meanwhile, highlighted several things which retail investors should take into consideration when investing in precious metals.
Mr Goh said that “counterparty risk and liquidity risk are important points to consider when investing (in precious metals) through mutual funds or (exchange-traded funds)”.
Mr Chwee also brought up liquidity as something to consider, as precious metals are subject to market fluctuations and may not be immediately convertible to cash. He added that, unlike cash, gold bears no interest.
He also said that buyers must consider storage when buying physical gold, as it could incur additional costs, although he noted that investors can purchase precious metals digitally through banks including OCBC.
“Consumers should also consider … their risk profile and appetite, and speak with a financial adviser before making a decision to invest in gold,” he said.