GOLD SWOT Analysis
Strengths
- Geopolitical tensions continue to provide a cushion to prices.
- Bullish momentum in charts signals long-term investor confidence.
- Fed's monetary policy, including potential rate cuts, supports prices.
- In 2023 Beijing's demand for investment by 28%.
- In 2023, India's demand for investment up 7% from 2022
- In 2023, China's gold demand was up 16 percent to 959 tonnes.
Weakness
- The dollar and Treasury yields rebounded after strong US jobs data Expectations of the Fed's rate cut campaign were shifted to May
- India's demand for Jewellery dropped 6% from 2022 to 562.3 tonnes
- Global demand for gold in 2023 dropped 5 percent to 4,448 tonnes
- Indian gold consumption in the Oct-Dec quarter fell 4% to 266.2 tonnes Reduction in managed money long positions reduces speculative froth and market volatility.
Opportunities
- Gold expected to reach 74,000 in 2024 due to stable rupee, geopolitical uncertainties.
- Central banks to increase their holding reserves in next 12 months.
- Gold demand to be supported by geopolitics in 2024 WGC
- Fed needs evidence to be confident that inflation will return to 2%.
- Investors remain worried amid deepening conflict in the Middle East
Threats
- Gold stuck in a consolidation phase between $2000-$2070.
- India's gold demand is expected to be subdued in Q1'24
- Fed's Powell said, "risks to achieving full employment and 2% inflation are better balanced."
- Fed may continue supporting restrictive monetary policy Investors are now pricing in 127bps rate cuts by end of 2024, down from 160bps cuts.