Gold’s popularity as an investment asset is ever-growing. Despite its high price, it is one thing people want to invest in, and since 2020, the price of gold has been all-time high. The gold chart marked its highest price in December 2023, and so far, 2024 is no exception, where the gold price is as high as $2000 per ounce.
In 2023, gold recorded an annual closing high in all currencies except the Swiss Franc. A rise of 15% was seen altogether in reasonable prices in 2023, and a record high of $2,078/oz was seen in December 2023.
The figure is only increasing, and experts suggest that the price of gold per ounce will touch $2200 by the end of this year. However, the prices fell below 2k on 14th Feb, once in two months of 2024. Also, there are chances that the price drop by the middle of this year. The rising price is attributed to the Fed’s lower rates and geopolitical tensions.
Factors That Can Lead To Increase In Gold Price In 2024
Considering the varying factors, the price of gold is expected to increase in 2024. What are those current factors, let’s see in detail-
Fed Rates Cut
Gold prices are highly dependent on the US central bank. When the Federal Reserve lowers its interest rate, the prices of gold go up. According to CNBC’s report, expectations of the Fed on rate cuts will probably lead to increased gold prices this year.
Fall of Treasury Yields
Following the early expectation of the Fed on rate cuts, The US treasury yields have fallen to 3.7%. This marked the lowest percentage since July of 2023. When treasury yields fall, the demand for gold rises. This year is expected to hold the same criteria.
Central Bank Demand
Last year, the central bank didn’t leave room for gold to escape. It bought thousands of tons of gold, ultimately raising the demand high. When gold demand is high, supply charges go up; hence, gold prices apparently increase. China’s hunt to fill their gold pots attributed primarily to gold demand. According to Techopedia, the demand for gold by the central bank would remain strong. Thus, an increase in the gold rate is expected for 2024, given its high demand.
Political instability
Geopolitical tensions have proved to be the best supporting factor in the performance of gold. Due to Ukraine Russian war, political instability in the country increased in 2023. According to WGC, gold rates saw a hike of 6.8% last October. Considering the ongoing conflict between Israel and Hamas, the case seems stationary in 2024 as well.
Gold Price Forecasts In 2024
If we look at the current economic outlook, the 10-year nominal yield is forecast to fall out 30 bp from 3.95% by the end of the first quarter, which will go to approximately 3.65% by the end of 2024.
By this time, the Fed-cutting cycle will weaken US dollar prices, and falling real yields will become the solo drivers for the gold breakout. This could drive the prices of gold to reach a new record high with an average of $2,175/oz in the fourth quarter, and ultimately seeing a peak of $2,300/oz by the start of 2025.
Gold’s prices decreased by 1% over the past weekend, assuring the most significant weekly decline in the last few months.
Gold remains a strong and prosperous asset relative to the underlying rates and foreign exchange (FX) fundamentals. However, any retracement in the coming months can allow the investors to position for a breakout rally starting around mid-2024.
Gold Outlook 2024 For Investors
Investors looking forward to investing in gold will have to keep some factors in mind before making a decision for the 2024 investments.
A soft landing is most likely to be seen, which has not been historically suitable for the gold returns. The positive thing is that geopolitical tensions and the continued buying of central banks can lead to good support for gold.
A most likely recession can lead to weaker growth and higher interest rates, which creates a positive environment for gold to become a hedge, and we have recently seen that performance historically.
Final Words
Experts anticipate a substantial rise in gold prices, and buying it will lead to higher returns. But the market is always volatile, and it is essential to understand that everything has pros and cons. It is better to talk with your financial advisor first to ensure it aligns with your plans.
