The World Gold Council’s forecasts for 2024 indicate a low likelihood of gold prices declining. The World Gold Council’s forecasts for 2024 indicate a low likelihood of gold prices declining. The World Gold Council’s forecasts for 2024 indicate a low likelihood of gold prices declining.
The Impact of Economic Conditions on Gold Prices
Global gold prices are witnessing record highs this month, extending a bullish trend into the end of the year that may continue if the U.S. economy slows down as expected, according to a report from the World Gold Council.
Gold Forecasts for 2024
In its forecasts for 2024, the Market Development group for the global gold industry presented potential scenarios for the global economy next year. Both potential outcomes – whether a soft economic downturn or a recession – are likely to support rising gold prices.
Continuity of Rising Gold Prices
The forecasts suggest that the recent increase in gold prices may have some momentum. Gold prices, based on futures contracts for December delivery, reached an all-time high of $2071 per ounce on December 1st and have risen for seven out of the last eight weeks. Gold prices have increased by 12% since the beginning of the year.
The Effect of the Economic Cycle on Gold Prices
The report acknowledged that the conventional soft landing “was not particularly attractive for gold,” as it typically results in stable or slightly lower yields. However, the report warned that every economic cycle is different and a combination of factors such as “rising geopolitical tensions in a major election year for many key economies, along with continued buying from central banks” could continue to support gold prices.
The Effect of Central Bank Purchases on Gold Prices
This year, gold prices have benefited from continuous purchases by central banks. Many investors have turned to gold as protection against inflation in recent years.
During the third quarter, central banks bought 800 tons of gold so far in 2023. This represents a 14% increase from the same period last year, when annual central bank purchases ultimately reached 1081 metric tons: more than double the previous year.
Investors increasingly expect the Federal Reserve to cut interest rates in the first half of 2024. Lower interest rates are likely to drive bond yields down. In recent weeks, falling bond yields have contributed to supporting rising gold prices, as lower yields may diminish the appeal of bonds as a safe haven for investors concerned about the economy.
Source: https://www.investopedia.com/will-gold-continue-to-sparkle-in-2024-8411982
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