Gold has reached a number of new record levels in the past year and a half — including more than $2,222 per ounce on March 21, 2024 and $2,509.73, on Aug. 16.
The interest in gold has been fueled in part by economic factors such as inflation, which has proved challenging to reduce.
“When it comes to gold and silver, inflation is usually a driver for higher prices,” says Everett Millman, a precious metals specialist at Gainesville Coins. “In general, they are effective hedges against [it].”
To try to rein in inflation — which rose as high as 9.1% in 2022, its peak level since 1981 — the Federal Reserve’s Federal Open Market Committee has made a series of increases to the target range for the federal funds rate.
Banks use the federal funds rate’s target range when lending each other money, which in turn influences consumer borrowing costs. Since July of last year, the FOMC has held the range at 5.25 to 5.5%.
Although inflation, while lower, still hasn’t reached the Fed’s 2% target, speculation that it will soon begin to lower rates — potentially at the FOMC’s next meeting on September 17 and 18 — has grown.
In a speech given at the Kansas City Fed’s annual conference at Jackson Hole in Wyoming, Federal Reserve Chair Jerome H. Powell said “the time has come for policy to adjust,” noting that “the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks,” according to the New York Times.
A rate cut could help propel the demand for gold even higher, Millman says.
“Lower rates are generally good for making gold a more attractive investment, especially at the very beginning of the rate-cutting cycle,” he says. “That’s going to be very important for gold in the coming months.”
Could Gold Rise Higher in 2024?
Other economic conditions may also influence the demand for gold and its price.
While other assets, such as stocks, can experience volatility in response to economic changes, as National Mining Association records show, gold’s price has remained fairly consistent — and at times increased — over the past more than 190 years.
Gold’s ability to perform well during both strong and weak economic periods can draw interest from investors when issues arise.
“Through the first half of the year, the U.S. economy was holding rather steady,” Millman says. “But we’ve seen GDP growth has slowed, unemployment has risen — multiple aspects of the economic health of the United States are pointing to a softer economy. Even if it’s not anything that causes a crisis, generally, when people are concerned about the economy, it does drive safe-haven flows into the gold market.”
With the relative uncertainty that currently exists, Millman anticipates we might see gold again hit new high points relatively soon. You can track the precious metal’s performance on Gainesville Coins’ website, which lists the latest spot price for gold.
“It’s really a confluence of factors,” Millman says. “We’re in the middle of a contentious election year; the conflict in the Middle East is intensifying, and recession fears in the U.S. are creeping up again — all of those developments point toward higher gold prices by the end of the year.”
