The traditional safe haven value of the market has worked really well in this 2023 that we have just finished, with an eye on possible improvements throughout 2024. Although a lot will have to do with the future of a dollar and the march of global interest rates augusta precious metals review.
There are two factors that can boost Gold in 2024, a year for which, as we will now see, market experts expect it to be a good year and even extend all-time highs. But first , we will say that gold clearly presents a favorable path in 2023 that we have just finished
Specifically, gold moves with an improvement of 1.5% in the last month, 11.4% in the quarter and with a year like this one with double-digit advances, of 13.5% to which is added, a year-on-year improvement by the same amount. With intraday levels of $2,150 per ounce, at the beginning of last December.
But as we say, two factors could be the factors that push gold up next year. The first, the expected fall in interest rates , although perhaps not as soon or as decisive as the market currently expects, with an expected cut of up to six times in the case of the Fed, which the Federal Reserve has only confirmed that there will be, at the moment and on paper, three. And without yet closing the door on raising rates, although the market already rules it out at this time.
Although this hope of a sudden cut and more aggressive than that initially announced in American rates , is what has led to a good part of the rally experienced by gold at the end of last year.
The second is the situation of the dollar, which also implies a cut, if the previous parameters are followed. So far this year, its index marks slight downward movements with an annual cut of 2.6% and more than 5% quarterly, a trend that, according to experts, can continue. On December 28, it even reached 100.62, its lowest level since last July.
And there is a third that has promoted progress and that could persist in 2024. We are talking about the fall in debt yields, and in the particular case of the American 10-year and 30-year that have set their levels, just a few years ago days, lowest since last July.
For iBroker analyst Antonio Castelo, “in 2020, the year of Covid, we saw it approximately in the area of 2,075 dollars an ounce , we saw a ceiling, we picked up the candles as, let’s say, the Covid epidemic dissipated and the markets were reactivated. stock markets and, in addition, we saw it again reach levels very similar to the outbreak of the war in Ukraine, when the market weakened very strongly.”
And he adds that “in the summer of last year, it picked up again and it has done so again now, more recently, coinciding with the outbreak of the conflict in the Middle East, it was a little earlier in October when they were at a minimum and it went down again. “this zone of maximums, fooling around above 2,000 dollars an ounce, but it does not finish pulling.”
Another important factor is reserves, especially looking at central banks, which have continued to increase their reserves in the current year. Russia is one of them, with an increase that globally exceeded 150 billion dollars, after growing, at the beginning of December of this year, 2.2%. Gold regaining strength against the dollar in global central banks, after the Russian war on Ukraine and the freezing of its assets.
Regarding the estimates from iBroker, Antonio Castelo points out that “we are leaving the current levels around 2040 dollars per ounce, what the market predicts is that by 2029 gold may be at levels of 2400. He endorses the curve of the different maturities of the futures and that is where I believe it can go, I believe that the recent purchases that the main central banks have been making for a couple of years are showing us a lot so that gold will have again, within what their reserves are, a percentage as important as it was years ago, this can undoubtedly help as well.”
Reuters considers that the potential improvement would remain practically untouched, with an average price, in its latest survey on this raw material, in which it places its level at 1,986.5 throughout 2024.
But they are betting on a rise in gold due to factors such as the flexibility of monetary policy and the risks of Israel’s conflict with Hamas in the Middle East.
From ING they affirm that in 2024 the price of gold will reach historical high levels, although all of this will be decisively influenced by the policy of the Federal Reserve. And also that, depending on the magnitude of the interest rate cut, with a landing, either forced or soft, of the economy.
Their estimates are for an average of 2,031 dollars per ounce in 2024, with an average for the fourth quarter of next year of 2,100, which would mark a new record price.
In addition, there are other factors that may influence a price increase for this year. This is estimated by the World Gold Council, which in its report on this year highlights that “the increase in geopolitical tensions in a key electoral year for many important economies, combined with the continued purchases of central banks, could provide additional support. to gold next year.”