Gold will fall to $1800 by year-end as inflation eases while the U.S. economy grows - Capital Economics

(Kitco News) - Gold is expected to fall to $1,800 per ounce by the end of the year as the US economy continues to grow and inflation pressures ease, according to analysts at Capital Economics.

Since rising to around $2,000 per ounce on safe-haven demand (due to concerns about the stability of banks in the US and Europe) in March-May this year, the price of gold has fallen, the analysts said in a recent report. According to the World Gold Council, global demand for gold fell by about 5% y/y in the first half of this year, mostly due to lower investor demand via exchange traded funds, while the gold supply increased slightly.

Capital Economics is forecasting more demand declines for the precious metal, owing to an unwinding of investor demand for gold as a hedge against a severe economic downturn and high inflation, they said. This is because we expect the US economy to contract only marginally in the fourth quarter, before recovering next year. Theyre also forecasting that U.S. inflation will drop closer to the Federal Reserves 2% target by the middle of 2024.