Gold Prices Predicted to Hit Record Highs of $2,300 in 2024
After prices jumped in 2023, gold is entering 2024 with many experts suggesting the safe haven asset could hit record highs this year.
In 2023, gold prices jumped from around $1,823 per oz. to $2,062 per oz.—an increase of over 13 percent—making it the best year for the yellow metal since 2020. On Dec. 4, gold hit a record-high price of $2,135.40 per oz. For 2024, experts predict gold prices to move higher.
“Following on from a surprisingly robust performance in 2023, we see further price gains in 2024, driven by a trifecta of momentum chasing hedge funds, central banks continuing to buy physical gold at a firm pace, and not least renewed demand from ETF investors,” said Saxo Bank’s Ole Hansen, according to Reuters.
JP Morgan predicts gold to see a “breakout rally” starting in the middle of this year due to Federal Reserve’s interest rate cuts. The bank expects gold to hit a peak of $2,300. Meanwhile, UBS projects gold prices to hit $2,150 by the end of this year if the rate cuts were to take place.
Gold saw major ups and downs in 2023, as one event after another affected investor perception. In May, the U.S. banking crisis pushed gold down to a low of $1,810 per oz. by early October. However, the Hamas attack on Israel that month triggered tensions and gold prices have been rising since then.
In November, the SPDR Gold Shares ETF, a popular exchange-traded fund tracking gold, saw net inflows of more than $1 billion, breaking five consecutive months of outflows. This was also the strongest month of net inflow since March 2022,
An Oct. 31 update by the World Gold Council (WGC) revealed that global central banks collectively bought “an astonishing” 800 tons of gold in the first three quarters of 2023. This is a 14 percent increase in gold buying compared with the same period last year.
A May 30 survey published by the organization found that a majority of central banks expect the proportion of their total reserves denominated in gold to increase over the next five years, thus contributing to upside pressure on gold prices.
Gold and Economic Scenarios
The WGC has three different predictions for gold rates this year depending on how the economic scenario plays out.
If there is a “soft landing” of the U.S. economy, which WGC attributes a 45 to 65 percent probability, the organization expects gold prices to remain “flat with upside potential.”
In the less probable “hard landing” scenario—25 to 55 percent probability—WGC expects gold prices to move “notably higher” and hit a new record high.
If the U.S. economy sees a “no landing” scenario where inflation and economic growth reaccelerates, WGC foresees gold prices to remain flat and face downside pressure. The “no landing” scenario has the lowest probability at just 5 to 10 percent.
“If the no-landing scenario does occur, it could prove initially challenging for gold. While positive economic growth would support consumer demand and higher inflation would increase the need for hedges, it is likely that the combination of higher rates and a stronger US dollar would create a drag, as they did in September 2023,” WGC said in the report.
“But if inflation surged again, it could elicit an even stronger monetary response—leading us back to the spectre of a hard(er) landing further down the line and a strong case for strategic gold allocations.”
In 2024, WGC expects major global elections in the United States, India, European Union, and Taiwan to be a geopolitical risk. As such, “investors’ need for portfolio hedges will likely be higher than normal.”
“The probability of a recession is not insignificant. From a risk-management perspective, this would provide strong support to the case of maintaining a strategic allocation to gold in the portfolio.”
Downside Risks
While many experts are bullish on gold, some advise exercising caution. In an interview with Yahoo Finance last month, Rob Haworth, senior investment strategy director at U.S. Bank Asset Management Group, pointed out that lower interest rates and investor hopes for Fed rate cuts have contributed to surging gold prices.
“A key question for bullish gold investors is whether these trends can be sustained. A still-growing U.S. economy and few signs the Fed is close to considering interest rate cuts are likely to temper near-term enthusiasm for gold.”
Opimus CEO Octavio Marenzi also warned investors against blindly betting money on gold after seeing the recent spike.
“The biggest mistake is sort of chasing the market and [being] a day late into getting the hot investment classes after they’ve had a big rally and a big pop,” he said.
A key factor for gold prices would be the strength of the U.S. dollar. The dollar is typically inversely related to gold prices. As such, a strong dollar could restrict the upside movement of gold prices or even contribute to a decline.
JP Morgan is expecting the U.S. dollar to remain at “elevated levels” in 2024, suggesting that it could even hit “new highs.”
