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The bank has an average price target of $2,175 an ounce for bullion in the final quarter of 2024, with risks skewed to the upside on a forecast for a mild US recession that’s likely to hit sometime before the Fed starts easing.

“We’re in a very prime place where we think gold ownership and long allocation to gold and silver is something that acts as both a late cycle diversifier and something that will perform as we look to the next sort of 12, 18 months,” Shearer said.

Gold and silver are “quite agnostic” to whether there’s a soft landing or hard landing in the US, although a more pronounced recession would result in a more dramatic cut in interest rates, he said. That’s in contrast to equities and cyclical commodities, such as aluminum and copper, where returns can vary considerably depending on the economic scenario, Shearer said.

Money managers’ net-long positions in gold futures have increased this year, but the trade still isn’t too crowded, he said. Other sources for physical demand have also come into effect, with central bank purchases becoming an increasingly strong driver of prices.

“There’s an eagerness here to really buy in and diversify allocation away from currencies,” Shearer said, adding that geopolitical risks have made gold even more appealing to governments.