Gold Market Forecast – Optimism Ahead of Three Rate Cuts Projected in 2024

The price of gold reached an all-time high of over $2,000 in December 2023. 

We will analyse the main market drivers behind this surge and provide a forecast of the gold price trajectory in 2024. This analysis will primarily focus on price movements and influential market factors.

Gold Price Jumps to Historical Peaks

On December 4th, for the first time in its millenary history, the price of gold jumped above $2,100 an ounce. However, when US macroeconomic data came in stronger than expected, this soon caused a retracement below the $2,000 mark. 

Despite this, the outlook for 2024 remains optimistic. Investors, anticipating dovish central bank policies and lower bond yields, have resumed buying, propelling the spot price back to around $2,070 (over $66 per gram). But, with many of the major stock indices close to their historical peak, they also want to hedge in case of market turmoil and falls in share prices.

Gold Price Technical Analysis

After a strong rebound in the final quarter of 2023, gold’s technical outlook has improved significantly. The previous low of $1,825 in early October 2023 now seems a distant memory.

So, what are the key levels to monitor?

Apart from the psychological threshold of $2,000, the first support zones are at $1,975 and $1,930. In the case of new rebounds, resistance levels (areas that offer obstacles to new rallies) are anticipated at $2,075 and the recent peak of $2,130-2,140.

Gold Price Drivers – Central Banks in the Spotlight

Central banks have recently been the primary market driver for the price of gold. 

In December, the Federal Reserve maintained interest rates between 5.25% and 5.50% for the third consecutive time. However, news from the dot plot chart revealed that the US central bank board members are now forecasting three rate cuts by the end of 2024. 

After the long series of interest hikes and the hawkish rhetoric of the last two years, the policymakers are now softening their position. 

According to the CME FedWatch tool, markets are already pricing rates at 4% by the end of 2024. This could be too optimistic, as it corresponds to six cuts of 0.25 percentage points (for a total decline from the current 5.50% of 150 bps). 

While several factors affect the gold price, as we’ll explore, it may be strongly influenced by the coming decisions of the major central banks.

Gold Price Forecast 2024

Overall, the majority of gold forecasts released so far are bullish, with many analysts expecting gold to refresh its all-time high in 2024.

If investors are correct and central banks are more dovish than has been announced so far, yields will continue to decline, and gold could benefit from this scenario. 

On the other hand, higher rates will represent an obstacle for further bullion rallies. Indeed, in this case, the implicit cost of holding gold is higher. Moreover, higher Treasury rates could also correspond to a stronger dollar, while a dovish Fed is usually (but not always) linked to a weaker greenback.

Looking at the 2024 gold forecast, Reuters conducted a poll in October (when the bullion spot price was lower than now). The survey revealed that most sector specialists were relatively optimistic in their gold prediction, expecting gold to average close to $2,000 in 2024.

ING Bank was even more bullish, predicting gold to average $2,031 in 2024. Its report specified that the final part of the year could see further gold rallies, as the price in Q4 2024 is forecasted to average in the region of $2,100. Geopolitical risks remain an upside factor, according to the bank, while a hawkish Fed and a strong US dollar represent the major risks for gold.

Another survey brought an even more optimistic forecast, with traders involved in the poll expecting gold at $2,342 by the end of 2024. This suggests that prices above $2,000 might not just be a peak but could establish a new normal, shifting the paradigm of gold valuation for the foreseeable future.