Morgan Stanley: Gold price to reach $2000 this year, set to break records next year!

Morgan Stanley predicts that by the end of this year, the price of gold will reach $2,012 per ounce, and by 2024, the price of gold will continue to rise to a new historical high.

Greg Shearer, Executive Director of Global Commodity Research at Morgan Stanley, predicts in the latest report that by the fourth quarter of 2024, the price of gold will reach around $2,175 per ounce, setting a new record. Compared to the current price, this means that the price of gold has about a 10% upside potential in approximately a year and a half.

Shearer predicts that the Fed's interest rate hike in July marks the end of the Fed's current rate hike cycle, and the Fed will begin cutting interest rates in mid-2024. He said that if the US economy enters a recession, gold still has further upside potential:

The more severe the recession in the US economy, the greater the magnitude of the Fed's interest rate cuts, which will provide stronger support for gold.

Gold is currently in a very favorable position. We believe that holding gold and having a long-term allocation to gold and silver can serve as a diversified investment tool in the late stage of the economic cycle and can also bring returns to investors in the next 12 to 18 months.

Due to the stronger-than-expected growth of the US GDP in the second quarter and the continued strength of the labor market, more and more investors believe that although the Fed raised interest rates again last week, the US has already escaped the shadow of a recession. Last week, Fed Chairman Powell stated that the Fed internally believes that although US economic growth will significantly slow down starting later this year, it no longer predicts a recession.

Nevertheless, many investors in the market are still concerned that a recession may be difficult to avoid. One of their important arguments is that there is still a large amount of data and evidence indicating that an economic recession is imminent, including the Leading Economic Indicators Index falling for 15 consecutive times, which is the longest continuous decline since 2008, an inverted yield curve, and an increase in the number of defaulting companies.

In the first half of this year, the price of gold rose by 5.4%, making it the second-best performing asset class globally, second only to developed market stocks.

Shearer stated that fund managers have increased their net long positions in gold futures this year, but gold trading is still not overcrowded.

He also stated that as central banks around the world continue to diversify their foreign exchange reserves and hedge geopolitical risks, institutional purchases of gold will also boost ordinary consumers' demand for physical gold, because in the current environment of uncertainty, it is necessary for individuals to achieve diversified asset allocation.

In the first quarter of this year, global central bank gold reserves increased by 228 tons, which is 38% higher than the record set in the first quarter of 2013.

According to the Central Bank Gold Reserves Survey released by the World Gold Council in 2023, 24% of central banks plan to increase their gold reserves in the next 12 months, and 71% of the surveyed central banks believe that the overall level of global gold reserves will increase in the next 12 months. The proportion of central banks holding this view has increased by 10 percentage points compared to last year.