Gold prices soared to an all-time high of $2,135.39/oz at the end of 2023.
The performance of gold as an investment has always been a subject of interest for both investors and analysts. As we step into 2024, there is growing speculation about whether gold will reach new all-time highs.
With expected interest rate cuts, and inflation calming down, it asks us to question what the gold price forecast for 2024 may be. We will look at insights from JP Morgan in this analytical article.
Key Factors Impacting High Gold Prices in 2024
One of the key drivers of gold prices, as highlighted by JP Morgan, is economic uncertainty. When global markets face instability or recessionary pressures, investors often flock to gold as a safe-haven asset. In such scenarios, gold tends to thrive, pushing its prices higher. For example, the price of gold shot up in response to the war between Israel and Palestine back on 7th October 2023.
Furthermore, inflation plays a pivotal role in the movement of gold prices. An increase in inflation erodes the purchasing power of fiat currencies. In response, investors seek refuge in assets like gold, which historically maintains its value during times of rising prices. Gold price estimates are based on official Fed forecasts, which show core inflation slowing to 2.4% in 2024 and 2.2% in 2025 before reverting to the 2% aim in 2026.
Central banks’ monetary policies can significantly impact gold prices in 2024
JP Morgan emphasises that low-interest rates and extensive quantitative easing measures can devalue currencies, leading to higher demand for gold. If central banks continue to implement accommodative policies, it could boost gold’s prospects in 2024.
JP Morgan’s insights highlight that stock market volatility can also influence gold prices. When equities experience turbulence, investors often diversify their portfolios by allocating more funds to gold. This could drive gold prices higher, especially if equities face headwinds in 2024.
Geopolitical events, such as conflicts and tensions between nations, have historically led to spikes in gold prices. As JP Morgan suggests, any unforeseen geopolitical developments could serve as a catalyst for gold’s ascent in 2024. Rising geopolitical tensions have meant that central banks purchasing gold has been a key catalyst for rising gold prices in 2024.
If investors continue to see gold as an attractive asset class, it could create upward pressure on prices due to increased supply and demand.
Factors like the stability of financial markets and the attractiveness of alternative investments will influence this demand
China led the way, with central banks purchasing more than 800 tonnes of gold in the first three quarters of 2023. J.P. Morgan Research predicts that worldwide central bank purchases will total 950 tonnes this year, with China continuing a large stable buyer. This will exceed the amount purchased during the same period in 2022, which resulted in a record demand.
Furthermore, the availability of newly mined gold and the efficiency of mining operations can affect the overall supply of gold in the market. If supply growth remains limited, it may contribute to higher prices, especially if demand remains strong.
In 2024, several factors will determine whether gold can reach another all-time high. The bottom line is that the interplay of economic uncertainty, inflation, monetary policy, stock market volatility, geopolitical events, investment demand, and supply constraints will shape gold’s trajectory.
It is essential to monitor these factors closely over the coming period of time to assess the likelihood of gold hitting new record highs. Investors and analysts alike will be keenly observing these dynamics to make informed decisions in the coming year and in the long term.
1) Is it a good time to invest in gold in 2024?
The decision to invest in gold in 2024 depends on various factors, including your financial goals and risk tolerance. Gold can be a hedge against economic uncertainty and inflation, but it’s essential to diversify your investment portfolio and consult with a financial advisor for personalised advice. Take a look at our comprehensive article to learn more about when is a good time to buy gold here.
2) What factors could lead to a decrease in gold prices in 2024?
Several factors, such as a strong economic recovery, higher interest rates, and a reduction in geopolitical tensions, could lead to a decrease in gold prices in 2024. To learn more about this take a look at our recent article on why the price of gold may fall here.
3) How can I track gold prices and stay updated on relevant news?
You can track gold prices through financial news websites, market analysis platforms, and by following the performance of gold futures contracts. Staying informed about economic indicators and global events that affect gold can also help you make informed decisions. At Tavex, we have a live price chart for both gold and silver that can easily keep you informed. Take a look at our live precious metals charts here.