(Kitco News) - The gold market continues to hold its ground near record highs and within striking distance of $2,400 an ounce as the International Monetary Fund says it sees slower but stable growth through 2024.
At its annual Spring meeting in Washington D.C., the IMF released its latest economic projects, saying it sees the global economy expanding 3.2% this year, the same as 2023. Advanced economies are expected to see their collective economies grow 1.7% this year, up slightly from 1.6% in 2023; meanwhile, emerging markets are expected to see growth of 4.2%, down slightly from the 4.3% reported last year.
Despite the stable reading for 2024, the IMF said that growth is at its lowest level in decades.
“It is lower than the medium-term projection of 3.6 percent made just before the onset of the pandemic (at the time of the January 2020 WEO Update), the 4.9 percent medium-term projection made just before the onset of the global financial crisis (at the time of the April 2008 WEO), and the historical (2000–19) annual average 3.8 percent for actual global growth,” the IMF said.
The U.S. has the standout economy among developed nations this year as the IMF sees GDP expanding 2.7%, up from 2.5% in 2023. U.S. economic growth was revised up from the January estimate of 2.1%.
“For 2024, an upward revision of 0.6 percentage point since the January 2024 WEO Update reflects largely statistical carryover effects from a stronger-than-expected growth outcome in the fourth quarter of 2023, with, in addition, some of the stronger momentum expected to persist into 2024,” the IMF said in its report.
Canada’s economy is expected to grow 1.8% this year, up from the 0.8% seen in 2023. The Eurozone is expected to see its GDP increase by 1.4% this year, up from 0.1% last year.
The gold market continues to ignore positive sentiment surrounding the health of the U.S. economy. June gold futures last traded at $2,398.90 an ounce, up 0.65% on the day.
Economists have said that solid economic activity coupled with stubborn inflation will force the Federal Reserve to delay the start of its easing cycle. Markets have already priced out a potential rate cut in June.
However, although rate cuts appear to be stalled, the IMF said that they still see interest rates going lower this year. The expectation that the Fed will ultimately cut continues to support gold prices, according to some analysts.
“With inflation projected to continue declining toward targets and longer-term inflation expectations remaining anchored, policy rates of central banks in major advanced economies are generally expected to start declining in the second half of 2024,” the IMF said.
