UBS Group (UBS) pointed out that gold delivered the worst performance of precious metals last week, but still rose 2.35%, with palladium showing the best performance with an increase of 8.50%. Looking ahead to 2024 and 2025, the bank believes that gold prices will rise by $2200, and the Fed's narrative will shift towards easing and interest rate cuts, which is stimulating investors to re formulate strategic bets.
UBS expects that as the cycle matures and future weak data shifts towards recession risks, real interest rate declines, and Federal Reserve policy easing, investors may regain their strategic positioning, and gold prices will reach new heights in 2024 and 2025 with sustained support, including strong official sector procurement and stable basic demand.
If they run a gold model in spot and evaluate pricing based on EV/EBITDA, free cash flow (FCF) returns, and net present value (NPV), they calculate that the pricing of SA gold stocks is $1800 per ounce, which means that if the average gold price is predicted to reach $2200 in 2025, it will increase the upward opportunity, "the bank said.
Indian gold jewelers saw strong sales during the Deepavali festival last weekend, with prices falling recently and consumer interest increasing significantly. Due to the increase in gold bar prices caused by the war between Israel and Hamas in early October, jewelers are concerned that buyers may hesitate during the holiday period. According to Bloomberg, gold prices will experience their first weekly increase in three weeks last week.
According to Canaccord, B2Gold's quarterly performance was better than expected, with production 4% higher than expected and sales up 15%. Adding a 2% increase in cash costs, EBITDA was $259 million, 19% higher than the predicted $217 million.
Argonaut Gold's adjusted basic earnings per share for the third quarter exceeded analysts' average expectations, with an adjusted basic earnings per share (EPS) of $0.01, a loss of $47 per share, and revenue of $104.8 million, a year-on-year increase of 39%, compared to an expected $107 million. Gold production was 53911 ounces equivalent, an increase of 17% compared to last year.
In terms of the threat to the gold market, although Russian gold is prohibited from being sold in the UK, it is still seeking ways to enter the international market. According to Bloomberg, Russia has switched to using Dubya and sold 96.4 tons of gold through the United Arab Emirates in 2022, making it the country's largest supplier.
Last week, the UK imposed sanctions on UAE counterparties involved in gold trading with Russia. Seeing these threats looming, in April 2023, the amount of gold shipped from Russia to Hong Kong significantly increased, with imports reaching 68 tons this year. China is easily a counterparty to these gold trading flows.
According to a report from the World Gold Council, although demand decreased by 6% year-on-year in the third quarter of this year, the total purchases by central banks in the first three quarters of this year increased by 14%.
The Office of the Investment Director of UBS Wealth Management stated that they believe that central banks may purchase over 1000 tons throughout the year, which should continue to provide support for gold prices.
Overall, UBS believes that gold
