Gold has been one of the best-performing assets in 2023, reaching new record highs above $2,000 per ounce.
Many experts believe that gold has more room to grow in 2024, as the global economy faces uncertainty and challenges from the pandemic, inflation, geopolitical tensions, and the U.S. presidential election. According to J.P. Morgan, gold prices could average $2,100/oz in the fourth quarter of 2024 and peak at $2,300/oz in 2025.
Some of the factors that could boost gold’s potential in 2024 are:
• A weaker U.S. dollar, which makes gold cheaper for foreign buyers and reduces its opportunity cost compared to other assets.
• Lower interest rates and quantitative easing by the Federal Reserve and other central banks, which increase the money supply and lower the real yield of bonds, making gold more attractive as a store of value and a hedge against inflation.
• Increased demand for safe-haven assets, as investors seek protection from market volatility, geopolitical risks, and social unrest.
• Higher purchases by central banks and exchange-traded funds (ETFs), which reflect the official and institutional recognition of gold as a strategic asset.
However, gold’s potential could also face some headwinds in 2024, such as:
• A faster-than-expected economic recovery, which could improve investor sentiment and reduce the need for stimulus and safe-haven assets.
• A hawkish shift in the Fed’s policy stance, which could strengthen the dollar and raise interest rates, making gold less appealinghttps
• Profit-taking and technical corrections, which could trigger sell-offs and limit gold’s upside momentum
Therefore, gold’s potential in 2024 could depend on how these factors play out and how the market reacts to them. Gold could either continue to shine or lose some of its luster, depending on the balance of risks and opportunities.