March 2024 was a golden month for gold mining stocks, marking their best performance in a year.
The catalyst? A mix of anticipation of lower interest rates and strong demand from central banks has sent gold prices – and by extension, gold mining stocks – surging.
Bullion found support at $2,160 an ounce, hitting an all-time high of $2,222 last week after a dovish Fed meeting, before staging a temporary reprieve.
THE VanEck Gold Miners ETF GDXa key barometer for the gold mining industry, has rallied robustly by more than 13% this month, putting it on track for its strongest monthly gain since March 2023, when it rose 17%.
This month, the gold mining sector has outpaced all other U.S. industries, even outperforming semiconductor stocks, as measured by the index VanEck Semiconductor ETF SMHand energy services, as indicated by art VanEck Oil Services ETF OIH.
Read also: The best gold stocks right now
Stefano GiuriaCEO of JP Morgan Private Bank, outlined a constructive view on the future of the precious metal in his latest investment strategy report.
The panel pointed to the Federal Reserve’s planned interest rate cuts starting in June 2024 as a key driver of gold’s appreciation over the next 12 months.
He noted: “In our opinion, this should set the stage for gold appreciation.”
The jury also highlighted the role of geopolitical tensions and the upcoming global elections in 2024, which will involve countries representing half the world’s population, in stimulating demand for gold from central banks.
With more than 60 countries headed to the polls in 2024 and regional conflicts ongoing, central banks are expected to continue to diversify their reserves into gold, which is potentially less sensitive to price changes.
“A persistent theme of geopolitical tension should continue to drive central bank reserve diversification,” Jury wrote, adding that he expects “more central banks to increase their buying momentum this year.”
Additionally, Jury predicted a return of retail ETF investors to the gold market as yields decline, signaling a thinly held and undervalued investment ripe for appreciation. JP Morgan’s forecast for gold prices by the end of 2024 stands at $2,250-2,350.
Read now: Larry Fink warns of US pension crisis in annual BlackRock letter: ‘You’re on your own’