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Traders like gold for several reasons. Firstly, gold is viewed as a haven asset that retains value during economic and political uncertainty. It is also a hedge against inflation, as its value tends to rise when inflation rises. Secondly, gold is a highly liquid asset that can provide diversification benefits to a portfolio.
Lastly, the supply of gold is limited, and its price is influenced by supply and demand dynamics. This makes it attractive to traders who can take advantage of price movements. As a result, gold can be an attractive asset for traders looking to diversify their portfolios, protect against inflation, or exploit supply and demand dynamics.
Gold and global instability
The Fitch has predicted a global recession in 2024. A recession is typically defined as a period of significant economic decline, marked by a contraction in economic activity, a reduction in GDP, and rising unemployment rates.
The projected GDP growth rate of 1.7% is considered slow and indicates that the global economy will likely face significant challenges in the coming years. The slow growth rate may be due to various factors, including ongoing global uncertainties such as geopolitical tensions, trade disputes, high interest rates, and several bank bankruptcies in the US.
A recession can significantly impact individuals and businesses worldwide, with job losses, reduced income, and lower levels of economic activity leading to financial instability and hardship. As such, individuals and companies need to take steps to prepare for and mitigate the impact of a potential recession, including diversifying their investments, reducing debt, and building up emergency savings.
See Gold price bullish trend in March 2024:
Recession and instability can push gold prices up!
The Fitch Ratings report from December 2023 suggests a complex global economic landscape for 2024. Key takeaways include:
- Global Slowdown Expected in 2024: While 2023 saw robust growth, especially with a surge in China and the U.S., Fitch predicts a sharp decline to 2.1% in global growth in 2024. This is attributed to factors like the ongoing property slump in China, stagnation in the eurozone, and the full impact of recent monetary tightening yet to be realized.
- Mixed Regional Outlooks: In the U.S., surprising resilience in growth, partly due to fiscal easing and strong private-sector finances, has led Fitch to revise its 2024 forecast upwards. It now avoids a recession with a growth prediction of 1.2%. However, the eurozone and the UK are experiencing technical recessions, with lower growth forecasts due to declining exports and tightening credit.
- Monetary Policies and Inflation Trends: Central banks are cautious about prematurely declaring victory over inflation and plan to maintain ‘restrictive’ rates. The U.S. Federal Reserve is expected to implement one more hike in 2024 before cutting rates, while the European Central Bank may start easing rates mid-year. Core inflation has fallen, especially in the eurozone, but remains high in the U.S. and the UK, with central banks wary of wage inflation due to tight labor markets.
In summary, while 2024 will likely not witness a global recession, it is set to be a year of significant Slowdown, with varied regional impacts and cautious monetary policies amidst shifting inflation trends.
Therefore, the weak US dollar, high-interest rates (5.25% in May 2023), and recession impact the rising trend of the gold price.
Any currency is given the back seat whenever global instability or turmoil occurs because precious metals take over. If we look back and review the market trends in 2012, when everyone believed that the world would end, gold prices reached a new high, and precious metals enjoyed a bullish market next year, history repeated itself in 2020 when gold became the first investment choice for many amidst the rising political and economic uncertainty.
Yellow metal became the preferred choice of those who were averse to risks and diversified their portfolios.
Gold price today in the USA
Gold Price Forecast 2024
Based on the expectation of a US interest rate cut, the weak US dollar, and the continuation of the recession, the gold price prediction for 2024 shows a potential $2500 at the end of the year. If the recession escalates, the gold price forecast can reach $2800.
Several factors can explain the potential increase in gold prices. Firstly, high US interest rates can lead to a weaker US dollar, making gold more attractive. Gold prices rise when the US dollar weakens as investors seek safe-haven assets to protect their investments.
Secondly, the continuation of the recession can also contribute to an increase in gold prices. This is because investors tend to move their money into safe-haven assets like gold during economic uncertainty, which can help protect their portfolios from market volatility and uncertainty.
Is Gold Going Up?
Yes, the price of gold can go up in 2024. because of the following factors:
- The interest rate cut is possible starting in March. The weak dollar, XAUUSD, goes up.
- US Inflation is stable and going down.
- Investors invest in metals more than in bonds.
- Potential continuation of recession in 2024. exist because of elections and slow industrial production.
- Technical analysis shows a bullish pattern on daily, weekly, and monthly charts.
However, silver prices are going up faster than gold. See video from last year:
We are well into the first half of 2021, and while everyone is hopeful because of the vaccine, its manufacturing is still limited. Moreover, many people are displaying adverse reactions to it. We can see the economy recovering, and people are slowly returning to their old routines, but will this be enough? Let’s see what the analysts have to say about the yellow metal.
An analyst at Capital Economics, Samuel Burman, shared his views. He believes there will be a significant recovery in economic activities because people have started getting vaccinated. He also sees the probability of further selling ETFs backed by gold. However, despite considering economic recovery, he is optimistic about gold. According to him, finding an effective vaccine will not bring down gold prices, and 2021 will be suitable for gold.
He also believes that persistently low US yields will likely support gold demand. This will ultimately offset much of the weakness associated with a rise in risk appetite.
Sharing their gold price forecast, Goldman Sachs’ analysts firmly believe their bullish outlook for the yellow metal will persist in the upcoming year. It is likely to reach a price target of $2,300 per ounce. They continue that the structural bull market for this precious metal is not yet over. They think it will resume in 2021 as inflation is expected to increase. It will subsequently weaken the US dollar. However, they maintain that it might be difficult for gold to sustain any momentum in the market in the short term.
Robert Kiyosaki is a well-known investor and finance guru. He is best known for his book Rich Dad, Poor Dad, which has sold millions of copies worldwide. He has a long history of making bold predictions about the financial markets, and his latest forecast is that gold will reach $3,800 an ounce by the end of 2023.
Kiyosaki has been a vocal proponent of gold as a hedge against inflation and economic uncertainty. He believes that the unprecedented levels of government spending and money printing in response to the COVID-19 pandemic will ultimately lead to inflation and a decline in the value of the US dollar. According to Kiyosaki, this will drive up the price of gold as investors seek out safe-haven assets.
Kiyosaki’s prediction of $3,800 an ounce of gold by the end of 2023 is a significant increase from current levels, with gold trading at around $1,800 an ounce as of May 2023. While it is difficult to predict future market movements with certainty, Kiyosaki’s prediction is based on his analysis of the current economic and political landscape and his belief that gold is undervalued relative to other assets.
Let’s Do a Quick Recap
Before we dig deeper into the gold forecast for this year, let’s quickly revise the latest trends that can potentially drive gold value in the future.
Political and economic instabilities fuel these precious metal prices. More uncertainties mean higher gold prices and 2022 was full of nothing but these uncertainties and shocks on a global level. As a result, investors have moved to metals, especially gold and silver, to hedge their portfolios. They are adding these to their holdings in every shape and form: gold bullions, stocks, exchange-traded funds (ETFs), and whatnot. This, in turn, is raising gold’s value.
In 2023, inflation was also on everyone’s mind, along with other issues. As governments tried to compensate for the damages done by COVID-199 through quantitative easing and fiscal stimulus, trillions of dollars were allowed to enter the global economy. McKinsey conducted research and concluded that this 2023 stimulus had already exceeded the measures taken during the global crisis of 2008-2009.
As more currency was circulated, investors felt its value had decreased. This encouraged them to switch from the USD to precious metals, especially gold.
If we are talking about the near future, the most important factor determining if gold prices will go up or not is the coronavirus. The cases start going down by the end of 2022, but now the world leaders are bracing themselves to deal with its second wave. The issues have started to rise again, and the governments are talking about reinstating lockdowns. In some places, the governments have already imposed short-term lockdowns. This will make things even more difficult for the already struggling economies. If the governments decide to introduce a new stimulus plan or fresh fiscal, gold prices will be higher.
The question again is if gold prices will go up in the future. It will depend on whether or not the global economy continues to remain stagnant. In addition, factors like the continuation of the pandemic and continuously rising geopolitical tensions will impact the already disturbed international trade. Unfortunately, it doesn’t seem like the situation is getting any better. If this continues, gold prices will climb higher. The new prices might even break previous records.
Conclusion
Is gold a good investment for 2024? While no one can predict any financial instrument’s exact future, most forecasts favor the metal.
The current recession and high interest rates indicate a bullish gold trend. However, one must remember that while most projections are generally bullish, the global financial markets remain highly volatile due to the economic crisis. This makes predicting the prices of gold will be rather tricky.
We must focus on the metal prices and think thoroughly before investing.
If you live in the US, you can invest in a Gold IRA and protect your retirement account from recession by investing in gold.
If you live outside the US:
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
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