WGC Foresees Strong Case for Strategic Investment in Gold

SEATTLE (Scrap Monster): The World Gold Council (WGC), in its 2024 outlook published Thursday, foresees a strong case for strategic investment in gold in the upcoming year. It must be noted that the yellow metal had performed exceptionally well, above all expectations, outperforming commodities, bonds and several stock markets.

According to the trade body, the geopolitical tensions covering several major economies, coupled with continued robust central bank purchases is likely to provide additional support to gold. Geopolitics had added between 3% and 6% to gold’s performance in 2023. Also, excess central bank demand had added 10% or more to gold’s performance.

The likelihood of U.S. Federal Reserve hiking the interest rates well above 5% and fears of a potential global recession are likely to encourage investors to hold on to their gold assets in portfolio as safe hedges.

The recession probability remains moderate to significant over the next one-year period, it noted. From a risk management perspective, such a scenario would provide strong support to the case of maintaining a strategic allocation to gold, WGC report said. Incidentally, gold has historically performed well during recessionary periods.

A likely economic expansion will be positive for gold consumption, while risks and uncertainties will boost investment demand for the yellow metal.