Gold prices are on course to reach all-time highs in 2024 as interest rates continue to fall and recessionary fears increase, elevating gold’s status as a safe haven asset.
According to Refinitiv statistics, spot gold prices reached a record intraday high of $2,072.5 on August 7, 2020. According to CNBC analysts, they could surpass that level and break the record.
“I do see gold moving above $2,100 as a trading level in late 2023, early 2024,” said Bart Melek, managing director and global head of commodity strategy at TD Securities, citing a probable pause in the US Federal Reserve’s tightening cycle.
In March 2022, the Fed began its steady sequence of rate hikes, as inflation reached its highest level in 40 years. It has increased borrowing charges to between 5.25% and 5.5% in less than two years.
Melek noted in a recent analysis that gold has outperformed most other major asset classes in the previous year, citing the yellow metal’s capacity to withstand rising interest rates and its worth as a safe bet against inflation.
Some analysts are particularly bullish on gold, predicting that it would reach $2,500 by the end of next year, which is more than 26% higher than present levels.
“My goal is to reach $2,500 by the end of 2024… Much of this is due to the fact that “recessionary forces may take hold later this year and gain traction in 2024,” according to David Neuhauser, founder of Livermore Partners. “2024 is when I see gold breaking out and reaching new highs and beyond.”
Neuhauser believes stagflation will endure in the global economy for the foreseeable future, as inflation falls to between 3% and 5%.
Gold is a dependable store of wealth, it performs well during times of economic instability such as recessions and stagflation, and it is frequently employed as a hedge against inflation.
“I’m pretty confident that we’ll see $2,500 gold in a couple of years,” said Randy Smallwood, CEO of Wheaton Precious Metals.
“Any type of recessionary move would be positive for gold,” he said, adding that he sees deterioration in both the Chinese and American economies.
UOB also predicts that gold prices would reach new highs in the second half of 2024.
“The anticipated peak in the Fed rate hike cycle, as well as the upcoming topping out of US Dollar strength, are key drivers in our positive outlook for gold,” said Heng Koon How, the bank’s head of markets strategy, global economics, and markets research.
He indicated that gold should trade higher when interest rates cease climbing and the dollar falls.
Heng forecasts that gold will be worth $2,100 per ounce by the second quarter of 2024.
Interest rates and gold prices have an inverse relationship.
As interest rates rise, gold demand falls as other investments such as bonds become more enticing and give higher returns.
In June, US inflation fell to its lowest annual rate in more than two years, reaching at 0.2% month on month. The Federal Reserve authorized a long-awaited interest rate boost in July, raising benchmark borrowing costs to their highest level in more than 22 years.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.