Trends that could affect the price of gold in 2024
The gold price recorded an all-time high in 2023, supported by financial and geopolitical instability. Investors are now watching intently to see what 2024 might bring. Here’s what experts see coming in the new year.
The yellow metal approached a new record in the first half of 2023 as the banking crisis took hold, and it reached that milestone in the second half, driven by the conflict in the Middle East. However, interest rate increases by the US Federal Reserve helped to make fixed income assets more attractive to investors, which dampened the appeal of precious metals.
The Fed’s fight against inflation
The fight against inflation will be one of the critical factors affecting the price of gold in 2024.
The Fed kept interest rates unchanged at 5.25% to 5.5% at its last meeting of the year, and the broad consensus is that the central bank is now done raising rates. However, this does not mean the Fed will reverse course immediately – with the latest inflation data showing a 3.1% increase in the consumer price index on an annual basis, the central bank is still far from its 2% inflation target. The latest dot plot, which shows where each Fed official thinks the federal funds rate is headed, points to at least three rate cuts in 2024, assuming each is 25 basis points.
Although gold has performed well in 2023 despite higher interest rates, precious metals tend to do better when interest rates are lower. For this reason, many market watchers believe that gold will move higher when the Fed reverses course.
Another key question is whether the Fed will be able to curb inflation without causing a recession. In early 2023, analysts predicted a moderate to severe recession, but with the US economy continuing to show strength, opinions are divided on whether 2024 will bring a soft landing or a harder outcome.
Geopolitics and central bank purchases support gold price
Current geopolitical factors affect the price of metals, including Russia’s ongoing invasion of Ukraine and the conflict between Israel and Hamas. These factors have led individual investors to seek a safe haven in the yellow metal, and they have been joined by central banks, which are on track to set records for annual gold purchases – by the end of September 2023, they had bought a combined 800 tons of gold.
About the Viking
With Viking’s signals, you have a good chance of finding the winners and selling in time. There are many securities. With Viking’s autopilots or tables, you can sort out the most interesting ETFs, stocks, options, warrants, funds, and so on. Vikingen is one of Sweden’s oldest equity research programs.
Click here to see what Vikingen offers: Detailed comparison – Stock market program for those who want to get even richer (vikingen.se)
