On Thursday, gold prices blew past previous highs which were only set a few weeks ago, reinforcing the yellow metal’s underlying strength. Understanding what’s behind this upward climb and where gold prices might be heading in the future is crucial for making informed investment decisions in this hectic climate.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Precious Metals Advisor Brian Conneely and Precious Metals Advisor Joe Elkjer explain gold’s current rally and why market analysts expect it to continue.
Gold Prices Hit Record Highs…Again!
Gold prices have been hovering in uncharted territory since bursting past the prior record-high of $2,078.80/oz only a few weeks ago. As of Thursday morning, its highest price has been $2,211.30. In mid-February, prices were barely above $2,000, representing more than a 10% jump in a little over a month.
What’s behind gold’s recent rally?
Gold’s confident upward movement comes on the back of an intense spike in gold demand from institutional investors and governments. Banks, hedge funds, and other financial elites are solidifying their positions in the face of an inflating stock market and destabilizing domestic economy. Central banks are pulling their weight by adding to their stockpiles in anticipation of a sea change in the global economy.
More immediately, the Federal Reserve’s recent meeting provided gold prices with an additional boost to the upside. Jerome Powell confirmed the Fed’s intention to cut rates three times throughout 2024. Immediately following the announcement, gold shot up to a new all-time high – the fifth in March.
That’s to say nothing of the explosive geopolitical conflicts across the globe. Hot wars in the Middle East and Eastern Europe along with rising tensions in the South China Sea further destabilize markets, encouraging countries, businesses, and retail investors alike to transition from traditional markets into physical assets with inherent value.
Why Central Banks Are Buying Up Gold Bullion
As the largest investors on the planet, central bank appetite for precious metals heavily influences gold prices. With central banks buying gold at record rates over the past few years, gold’s price increase has been inevitable. Central banks have scooped up 1,136 tonnes and 1,037 tonnes in 2022 and 2023, respectively. These numbers blow away demand from previous years.
You’d have to go back the previous five decades to combine central bank gold buying to equal what they’ve done in the last year.–
China is leading the rush into gold with February marking its 16th consecutive month adding to its growing reserves. Russia and other BRICS nations have followed suit with increased gold buying in the last few years.
This global shift into gold is spurred countries de-dollarizing away from the world reserve currency, a title the dollar has held for decades. Central banks recognize gold’s role as a stable asset with inherent value, and that stability is increasingly critical as the global economy tremors.
Gold Price Predictions Rise
The confluence of heightened gold demand, deteriorating economic conditions, and upward momentum has experts increasing their forecasts.
You’d have to go back the previous five decades to combine central bank gold buying to equal what they’ve done in the last year.–
Bank of America, which is reluctant to advocate for gold, is predicting a strong $2,400 gold price. That’s just below the average gold price forecasts for 2024 which hover around $2,500.
TheStreet’s Analyst Carley Garner, who predicted the current gold price rally, stated that it wouldn’t be out of the question to see gold prices continue climbing up to $2,600 per ounce.
Don’t Wait to Buy Gold, Buy Gold and Wait
Gold prices are on the rise, and they’re expected to move even higher. Institutional investors and central banks aren’t fooled by the Potemkin stock market which is why they’re hedging against economic instability with gold. This surge in demand is pushing prices up, but gold is still relatively inexpensive considering expert forecasts for 2024.
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