Will Gold Reach a New Record High in 2024?

As Gold prices have gained more than 12% since the beginning of the year after a relatively flat 2022 year, most investors are wondering if the yellow metal will be able to stay above the key level of $2,000 in 2024, and if it has the potential to keep rising next year.

Gold prices on the daily chart seemed to be capped by the Tenken line (red line) of the Ichimoku indicator today, and the weekly chart also shows that the metal is currently trading at a key level.

The overall technical configuration is rather bullish, with rising RSI and prices above the Ichimoku cloud with the Lagging Span (green line) above all obstacles that the price and the other lines of the indicator represent.

Still, Gold will need another impulse to go beyond its previous highs and remain at these levels. Will macroeconomics provide this momentum? What should you focus on? How can you get exposure to Gold in 2024? Let’s dive right in.

What Factors Might Support the Commodity Next Year?

Gold is a metal frequently chosen by investors during periods of heightened geopolitical tensions and economic uncertainty, due to its role as a store of value, and 2024 is likely to be a year with many risks for several reasons.

The first one is the trajectory of monetary policy around the world, especially in the United States.

Based on yesterday’s dot plot from the FOMC members, investors are now expecting the Fed to cut interest rates 3 times in 2024 for a total of 75 basis points, as inflation is likely to continue decreasing towards the target of 2%, and employment and growth seem resilient enough.

Lower interest rates are usually good for Gold, as the USD and Treasury yields usually weaken.

Accommodative monetary policies tend to weaken the local currency compared to its peers, which might provide higher interest rates and therefore investment opportunities with higher returns.

As Gold is priced in USD, a lower USD means that the commodity is cheaper for international buyers with foreign currencies, which tends to support demand.

When key interest rates decrease, the ripple effect extends to related interest rates, such as those associated with mortgages or investment products that bear interest, like savings accounts and bonds. The resulting overall reduction in the interest income generated by these financial products means that the opportunity cost of holding non-interest-bearing assets like Gold decreases.

That’s why investors often turn to Gold during periods of decreasing interest rates as it serves as a valuable asset that doesn’t rely on interest payments for its attractiveness, providing a hedge against the diminishing returns associated with interest-sensitive investments.

As the Fed expects American growth to cool in 2024, investors will need to monitor the risk of a recession in the United States, which could also push the Fed to cut its interest rates. In that case, the economic uncertainty will likely support Gold prices, as investors will be unsure of what the future holds.

2024 stands out as a pivotal year due to significant elections scheduled in various regions globally, whose outcomes could mold the landscape of future international trade relations and contribute to geopolitical tensions.

As the United States, Taiwan, India, Mexico, Russia, South Africa, the European Union, and the United Kingdom may undergo political transitions, the resulting changes in leadership and policies could have far-reaching implications, influencing diplomatic ties, economic partnerships, and global power dynamics.

The price of Gold could find support in the face of heightened uncertainty resulting from potential shifts in the international political and economic spheres.

Finally, it will be insightful to track the pattern of central banks’ Gold acquisitions following their impressive purchase levels in recent years. As reported by the World Gold Council, central banks are increasing their Gold holdings in 2023 for several reasons.

Gold is valued for its performance during crises, its role as a long-term store of value and hedge against inflation, its effectiveness as a portfolio diversifier, and its absence of default risk and high liquidity. Additionally, central banks are acquiring Gold as a geopolitical diversifier due to its lack of political risk and as part of a broader de-dollarization strategy.

A reminder of what influences the price of Gold

• Mining exploration, production, and cost
• Central banks’ holdings
• Recycling rates
• Jewellery fabrication
• Technological uses of Gold
• Industrial demand
• Monetary policy (especially from the Fed)
• Inflation trends
• Value of the American Dollar
• Geopolitical tensions
• Economic uncertainty
• Gold ETFs and investment demand
• Market sentiment and speculation

Best Ways to Invest in Gold

If you believe that Gold will keep increasing in 2024, there are a range of ways you can invest in Gold, the most popular being buying physical Gold like coins, bars, or jewellery. This method is particularly popular among those who want to rely on the commodity physically and hold it for a (very) long period of time. However, it’s important to secure and store your physical Gold in an appropriate location.

Have a look at this guide from ActivTrades for more information about: Physical Gold vs. Paper Gold: What’s Best?

You can also invest in paper Gold, which usually implies using financial products based on Gold to be exposed to its price fluctuation, such as Gold ETFs (Exchange-Traded Funds). These funds are rather popular among traders because of their high liquidity and their easy access. Investing in Gold through an ETF is indeed as easy as buying and selling shares, and most online brokers offer an ETF on Gold nowadays.

Another way is to buy shares of mining companies that are engaged in gold mining activities.

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