Will gold sustain new highs?

Gold prices have surged to around the $2,100 level this week as the market eagerly anticipates interest rate cuts by the U.S. Federal Reserve. Nere Teriba, Vice Chairman of Kian Smith Refinery, shared insights on the price movements and Q2 production forecasts for African producers in a recent interview with CNBC Africa. Teriba indicated that the expectations of rate cuts have intensified demand for gold, driving its price higher. With pending reports from the European Central Banks on their gold reserves and the upcoming CPI report, market experts believe that these factors could further impact the gold market. Teriba highlighted the current bullish market sentiment, with traders betting on a 70% chance of a rate cut. In terms of production trends for African top producers such as Ghana, Mali, and Burkina Faso, Teriba noted that there are no significant forecasts for astronomical increases in production. However, countries like South Africa may benefit from increased gold production due to enhanced buying power. Moreover, currencies that produce gold could gain stability amid higher production levels. Teriba mentioned that countries like Ghana, which engage in gold-for-petroleum product swaps, may not experience a substantial impact from higher gold prices coupled with elevated crude oil prices. While gold has demonstrated some fluctuations since 2021, recent data indicates a notable upward trend. Market analysts have predicted that gold could reach $2,300 by the end of Q4, with J.P. Morgan previously forecasting this target. Teriba emphasized a strong demand for gold in Nigeria, attributing it to the FX crisis and inflation concerns driving individuals to invest in gold as a store of value. Despite the region's rising gold production, Teriba highlighted that demand still surpasses supply, indicating a potential imbalance in the market. The appeal of gold as a safe haven asset remains robust amidst global uncertainty, high inflation rates, and softer economic growth. Teriba expressed confidence in gold's outlook, projecting that it will continue to shine throughout the rest of the year and potentially beyond 2025. As market participants eagerly await the U.S. non-farm payrolls data and additional economic indicators, the trajectory of gold prices remains a focal point for investors worldwide. In conclusion, the current momentum in the gold market underscores the significance of upcoming economic reports and policy decisions by central banks. With Africa's gold production landscape evolving and demand for the precious metal on the rise, stakeholders in the mining industry are closely monitoring these developments to navigate the dynamic market environment.