Bullion bull run to continue: White metal may see a breakout in 2024

• Gold prices went up by 14% in 2023, while silver gained as much as 8% during the year.
• In 2024, gold is expected to give 10-11% returns with silver returns pegged at 12-15%.
• Silver prices could see a breakout year in 2024, with good performance in the second half.
  

Gold may have outshined silver in 2023, but in the coming year, white metal may see asharper price hike, experts say. While gold gained as much as 14% during the year, silver price movement has not matched up pace. This may change and the white metal is expected to see a breakout.

It’s customary for silver prices to move with gold, but the former saw a rollercoaster ride with ups and downs – ending the year with 8% gains in 2023. On the other hand, gold’s safe haven status was greatly enhanced during the year due to geopolitical tensions, tight interest rates as well as central bank buying.

Silver safe, gold safest

Silver too saw a positive movement due to geopolitical tensions, decline in the US yield curve and the dollar index, among other factors that sparked the movement. But it did not react as sharply as gold, even as it too provides safe haven advantages.

But the coming year may see it shine as much or even brighter than gold. “Silver is a precious metal and also an industrial metal, so it is getting double tailwinds. It seems that the three-year consolidation (August 2020-December 2023) in silver prices is coming to an end. This is likely to get over in March,” expects Aprajita Saxena, research analyst at Trustline, an equity research and asset management firm.

Naveen Mathur, director of commodities & currencies at Anand Rathi Shares and Stock Brokers believes silver can give double digit gains in 2024. “Silver is also expected to remain a bright spot for 2024, as continued deficit projections along with investment demand may push the white metal to give further 12-15 % returns after having a bullish 2023,” he added.

Most experts believe that silver might start off with a tepid first half in 2024, but may gain slowly ahead. “Silver will initially underperform gold, but in the later half of the year, I will not be surprised if it outperforms gold. Once crude stabilizes, and comes under $75 all then all economic activities, and metals like silver and copper will pick up,” said Saxena.

Gold will keep up its run

The yellow metal on the other hand, is expected to sharpen its shine in 2024. In the last three weeks of December, investors doubled down bets on the precious metal. The Federal Reserve is expected to unwind its restrictive stance on monetary policy in 2024. Decline in yields which is expected to have peaked in the current quarter along with weaker dollar index also provided a boost to gold prices.

Experts feel that the metal still has juice left for investors. Treasury yields, declining US dollar, and expectations of lower interest rates in the upcoming year could keep supporting gold prices. Most experts expect gold to give as much as 10-11% returns in the coming year.

“When interest rates remain lower, inflation begins to increase, which subsequently lifts gold prices. In 2024, the Fed will remain dovish on monetary policy, which would be a favorable condition for gold's bull run,” said Nirpendra Yadav, senior commodity research analyst at Swastika Investmart.

The ongoing geopolitical issue may continue next year, which may elevate gold prices to higher levels. “Opportunities do exist for traders/investors to make fresh moves as new highs are still possible in the coming year in Gold amid probabilities of an interest rate cut as soon as March 2024 increasing with markets anticipating 6-7 rate cuts for 2024 resulting in a hard landing scenario,” said Mathur.