Where are gold prices headed in 2024?

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With gold hovering around US$2,000 an ounce, after reaching a nominal high of US$2,152 in December, global experts are making predictions on what they expect in 2024.

With investors facing tumultuous economic and political times, many turn to increasing their gold holdings.

“The last two years, gold, the commodity has outperformed the S&P, the NASDAQ and the TSX. Since the beginning of 2022 gold is up roughly around 12 per cent,” says Jim Thorne, chief market strategist for Wellington-Altus Private Wealth (Wellington-Altus Financial Inc.) in Toronto.

Jim Thorne, Wellington-Altus, Canada

He predicts that gold will rise between 10 to 15 per cent in 2024, and could possibly hit US$2,300 by the end of 2024, and then US$2,500 by the end of 2025.

Thorne cites various factors behind this prediction, saying that there will be a recession in Canada, with inflation dipping below the 2-per-cent target. He believes a recession will be averted in the U.S. with a soft landing that will bring that economy down, but not to recessionary levels.

However, he points out that the United States is also facing economic challenges, which bode well for gold.

“They need to get interest rates down because with debt-to-GDP in the U.S. at [about] 130 per cent, they cannot refinance that debt at 5 per cent,” says Thorne.

With debt levels, government spending and economic growth on both sides of the border unsustainable, there will be pressure on central banks within the next couple of years to reflate, which will also help create a bullish market for gold, he forecasts.

Jon Mills, Morningstar, Australia

Jon Mills, an equity analyst for mining for Morningstar Australasia Pty Ltd. (Morningstar Inc.), in Sydney, Australia, noted that gold has reached near historical highs only recently, and that over the longer term, despite a lot of volatility, the gold price is broadly unchanged since the previous high was reached in August 2020.

“Currently gold prices are being driven by expectations that real interest rates will fall as inflation moderates and the world’s major central banks reach peak interest rates and potentially even start lowering interest rates [in 2024],” says Mills.

However, should volatility in the financial markets increase, or if geopolitical tensions rise in 2024, “this could support gold prices as investors rush to safety, with gold traditionally seen as a safe haven in times of stress,” he adds.

Henrik Marx, Heraeus Precious Metals, Germany

“We believe there is a lot of upside potential for the gold price in 2024,” says Henrik Marx, head of global precious metals trading at Heraeus Precious Metals in Hanau, Germany.

“Considering the current high inflation and bond yields it wouldn´t be a surprise to see gold trading lower. [However] once central banks start cutting interest rates, we expect gold to trade higher. Therefore our forecast for gold is a possible high of US$2,250 an ounce [in 2024],” he predicts.

Interest rate cuts and inflation will be the two major influencing factors affecting the price of gold, says Marx.

Onno Rutten, Mackenzie Resource Team, Canada

“We’re positively disposed to gold,” says Onno Rutten, vice-president and portfolio manager of Mackenzie Resource Team, a subsidiary of IGM Financial in Toronto.

Noting that the United States has the world’s largest economy, and that “U.S. rates really drive the global economic outlook,” Rutten says there are several factors which indicate that gold could rise in price this year – although declining to predict a specific amount.

These include a strong U.S. economy, with low unemployment and real income growth, and “uniquely strong economic growth” relative to the world’s other large economies.

Furthermore, he notes, the U.S. Federal Reserve has guided to cut interest rates by 75 basis points, with the market anticipating closer to 150 basis points. And with real rates – nominal rates minus inflation – already declining, that would historically indicate that the price of gold should rise this year, says Rutten.

Rutten notes that there is also “the risk of another supply side shock” because of substantial limits to traffic on the Panama Canal and Suez Canal, which is starting to drive transport costs up again, that could potentially contribute to another inflationary wave.

“We always argue that investors should have some exposure to gold because it provides insurance against those unforeseen situations,” says Rutten.

Another variable that is very important for a positive gold outlook is the buying of gold by central banks globally, which ties into geopolitical developments. “What we have seen in the past two years is an unprecedented wave of buying of physical gold by central banks, especially in China. It’s as much as 25 per cent of the entire gold demand right now,” says Rutten.

Unlike individual gold buyers – who can be “very finicky – central gold buyers are systematic buyers [and] and that’s very important for the outlook for gold,” he adds.

Other factors contribute to the bullish outlook for gold.

“I think there is so much geo-political uncertainty there will be a large cohort of investors that will buy gold for safety,” says Thorne.

If Donald Trump gets elected as U.S. president in 2024, “I don’t see any calm waters between now and let’s say 2028,” predicts Thorne. “This polarization is not going away. This is going to get intense and as it gets intense, people will run to gold for safety.

“You’ve got a time of extreme geopolitical uncertainty, political tensions, and it’s clear that we’re going to have to reflate to get to our way out of this. This atmosphere is perfect for gold, absolutely perfect for gold,” he stresses.

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