Gold prices have surged to unprecedented heights, marking a consecutive two-day climb, hitting a remarkable $2,100 in spot prices amid a global frenzy for the precious metal.
Analysts project a sustained rise in gold rates into the upcoming year, foreseeing levels comfortably above $2,000. Geopolitical uncertainties, a potentially weakening U.S. dollar, and the potential for interest rate cuts are cited as primary drivers for this projected surge.
The value of gold has seen a steady increase over the past two months, fueled by the Israel-Palestine conflict that has amplified the demand for safe-haven assets. The anticipation of interest rate reductions has further bolstered this trend. Gold has historically proven its resilience during periods of economic and geopolitical instability due to its intrinsic nature as a dependable store of value.
Experts are optimistic about the trajectory of gold prices in the coming years. Heng Koon How, UOB’s Head of Markets Strategy, foresees a potential ascent to $2,200 by the conclusion of 2024, attributing this surge to the anticipated decline in the U.S. dollar and interest rates.
Another bullish perspective comes from Nicky Shiels, the head of metals strategy at MKS PAMP, who perceives a less leveraged market compared to 2011, potentially propelling prices beyond $2,100 and even toward $2,200 per ounce.
Despite the brief retracement after reaching a peak of $2,110.8 per ounce on Monday, gold remains strong, presently trading at $2,084.59. Friday’s record-breaking climb to $2,075.09 surpassed the prior intraday high of $2,072.5 in August 2020, as per LSEG data.
TD Securities’ Bart Melek envisions an average gold price of $2,100 in the second quarter of 2024, underscoring strong central bank acquisitions as a significant factor in the price surge. A survey by the World Gold Council revealed that 24% of central banks plan to bolster their gold reserves over the next year, displaying a growing wariness toward the U.S. dollar as a reserve asset.
Melek highlights the potential for a policy shift by the Federal Reserve in 2024, suggesting that lower interest rates could weaken the dollar, making gold more affordable for international buyers, thereby boosting its demand.