March 2024 has been a golden month for gold mining stocks, marking their best performance in a year.
The catalyst? A mix of anticipation for lower interest rates and robust demand from central banks sent gold prices — and consequently, gold mining stocks — soaring.
The bullion found support at $2,160 per ounce, hitting all-time highs at $2,222 last week following a dovish Fed meeting, before staging a temporary respite.
The VanEck Gold Miners ETF (NYSE:GDX), a key barometer for the gold mining industry, saw a robust rally of over 13% this month, setting it on course for its strongest monthly gain since March 2023, when it rose by 17%.
This month, the gold mining sector has outshone all other U.S. industries, surpassing even the performance of semiconductor stocks, as measured by the VanEck Semiconductor ETF (NYSE:SMH), and energy services, as indicated by the VanEck Oil Services ETF (NYSE:OIH).
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Stephen Jury, managing director at J.P. Morgan Private Bank, outlined a constructive view on the precious metal’s future, in his latest investment strategy report.
Jury pointed to the Federal Reserve’s anticipated interest rate cuts starting June 2024 as a key driver for gold’s appreciation in the next 12 months.
He noted, “In our opinion, this should set the stage for gold appreciation.”
Jury also highlighted the role of geopolitical tensions and the upcoming global elections in 2024, involving countries that represent half of the world’s population, in driving central bank demand for gold.
With more than 60 countries heading to the polls in 2024 and ongoing regional conflicts, central banks are expected to continue diversifying their reserves into gold, 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 expected “more central banks to add to their buying momentum this year”
Additionally, Jury anticipated a return of retail ETF investors to the gold market as yields fall, marking an under-owned and under-appreciated investment ripe for appreciation. JP Morgan’s forecast for gold prices by year-end 2024 stands at $2,250-2,350.
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