After a 2023 in which the value of the golden metal has risen to record highs, financial analysts expect the value of gold to continue to rise during 2024, thanks to falling interest rates and strong demand from central banks.

So far in 2023, the price of gold has risen by 13% compared to the same period last year, exceeding expectations in a high-interest rate environment. This is a much higher return than other low-risk savings or investment options, such as fixed-term deposits or Treasury bills.

The US banking crisis, geopolitical tensions, military conflicts and the US Federal Reserve’s stance on maintaining interest rates have been some of the main factors contributing to the fact that gold continued to be a safe-haven asset for investors throughout the year.

Although gold prices started in a downward trend in October – after falling during September – the outbreak of a new armed conflict between Palestine and Israel pushed the price of the precious metal up by more than 10%, surpassing the mythical figure of $2,000 on the 4th of September, when it reached $2,130.2 per ounce, thus offsetting the losses that had occurred since the highs of May.

Gold prices are likely to remain high through 2024

According to a Reuters survey of 30 analysts and market participants, the price of gold will rise during 2024 from this year’s average. Specifically, they forecast an average price of $1,986.5 per ounce in 2024, up from this year’s forecast of $1,925.

This is based on the assumption that global central banks will begin to loosen monetary policy and the fact that tensions in the Middle East continue to drive gold as a safe-haven asset for investors. “Gold has had a long history of being a geopolitical hedging instrument and has performed true to its reputation,” said Nitesh Shah, commodity strategist at WisdomTree.

Most economists agree that the Federal Reserve will end its interest rate hikes and start cutting rates in the first half of 2024, encouraging a revaluation of gold. Marko Kolanovic, head of markets at JPMorgan, advises investors to bet on safe-haven assets such as gold and bonds as tensions in the Middle East escalate, while Goldman Sachs expects commodity yields such as gold to rise over the next 12 months.

Still, as Carsten Menke of Julius Baer (an international reference in wealth management) says, “A return towards record-highs should only be possible in case of a severe slowdown of the U.S. economy, leading into a longer-lasting and broader-based recession.”

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