What Will Happen to the Price of Gold in 2024?

At the beginning of this 2023, there were predictions that:

Gold could challenge the $2,050/oz level in the second half of 2023 and possibly even attempt a new high

And yes! The record was achieved and the gold spent the year shining!

Many analysts and institutions have published their predictions for the price of gold in 2024. We have compiled the forecasts by publishing the essence of the opinions expressed. 

JP Morgan’s Opinion

JP Morgan predicts that gold and silver will outperform other metals. The start of the FRS rate cut cycle and the fall in real yields in the US are considered to be the main factors that can potentially raise the price of gold in 2024. The bank’s analysts are of the opinion that by the IV quarter the average price of the precious metal will reach $2,175 per troy ounce.

The bank’s analysts are confident about the medium-term growth forecasts for gold and silver prices in 2024 and the first half of 2025. Although the time of entry into the gold market can still become the decisive criterion.

Opinion of Bank of America 

The bank’s analysts believe that the change in the FRS interest rate policy and geopolitical conflicts are the main factors that will be able to raise the price of gold in 2024 as well.

Lower interest rates combined with a weaker US dollar are supporting gold

Kitco News said, citing Bank of America forecasts.

Bank of America sees a particular connection to the development of oil prices in the context of the Middle East conflict. The price of oil could reach $150 per barrel or even exceed this level if the spread of the regional conflict damages the energy infrastructure in the Middle East. The bank’s experts explain that under such conditions, the price of gold could rise even to 2400 USD/oz.

Independent Analysts

According to IMF forecasts, the growth of global prosperity next year could be around 3%. According to the analyst, this factor can also become a driving force for gold price growth, as the increase in prosperity will support the main component of demand – the jewellery industry. An additional effect may be the impact of increased demand from global central banks.

In the base scenario, experts, unfortunately, still consider the persistence of geopolitical tension and its positive impact on the price of gold. As a potential risk to the price of gold, progress in solving geopolitical conflicts can be mentioned.

Other factors that could limit further gains in gold prices include slowing growth rates in major economies and a potential fresh rise in inflation. Many analysts believe that the gold price will exceed $2,200/oz in the first half of the year and could reach $2,300/oz by the end of 2024.

World Gold Council (WGC)

WGC experts believe that demand for the precious metal will remain stable in 2024. However, prices are likely to be volatile (this behaviour of the gold price was also typical in 2023).

The WGC report said many economists expect a “soft landing” for the US economy – the FRS is likely to reach its inflation target without triggering a recession, which would be a positive signal for the global economy. The industry body, which represents the major gold mining companies, noted that historically soft landing conditions have not been very attractive for gold, resulting in flat or even slightly negative average returns.

However, the WGC notes that every cycle is different. This time around, rising geopolitical tensions in a key election year for many major economies, coupled with continued gold buying by central banks, could provide support for gold.

What Will Support Demand for Gold in 2024?

Central Bank Purchases

According to the WGC, a supportive factor for precious metals in 2024 is further central bank purchases.

“We see that excessive central bank demand has increased the price of gold by some 10% in 2023. And banks will probably continue to add gold to their reserves. Even if 2024 does not reach the same highs as we have seen in the previous two years, we expect any above-trend buying (ie above 450-500 tonnes) should provide additional impetus to the market,” the WGC said.

The WGC’s chief market strategist said central banks will continue to be important players in the gold market well into 2024. “We expect central bank buying to continue next year, largely amid the global financial crisis,” said a WGC strategist.

Geopolitical Risks

According to WGC data, the two most significant events driving demand for gold in 2023 were the collapse of Silicon Valley Bank and the conflict between Israel and Hamas

The report says that negative geopolitical events have increased the price of gold by 3% to 6% over the year. WGC representatives note that in a year, major elections will be held around the world, including the US, EU, India and Taiwan. This, in turn, will encourage investors to hedge their portfolio. Moreover, this need, according to the WGC, is likely to be greater than usual.

Should You Pick Gold Mining Stocks?

Interestingly, the gold winners did not participate in the gold rally this year at all.

Gold is up 10% year-to-date (in euro terms), while gold mining stocks moved in the opposite direction, down 1%. The gold miners’ weakness remains control over construction and operation. The cost of gold mining has increased by at least 55% over the past ten years. This fact cannot have a positive effect on the stock prices of gold mining companies.

Since 2020, gold has shown quite stable dynamics. Even global upheavals such as the Covid-19 pandemic, rising inflation and the subsequent rise in interest rates have had limited impact on the price of gold. Thus gold’s status as an active safe harbour is confirmed and maintained. This stability is based on the diversity of demand sources. 

Today, gold fulfills several functions – it is both an investment and speculative asset, a hedging instrument, a luxury commodity and an industrial metal.