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Gold Price Prediction 2024: A Complete Guide

Gold Price Prediction

If you are someone who is linked to the investment market, then you must know that gold stands out as a valued investment. In the past, gold was important for electronics and jewellery. Now, many people see it as a safe investment. Therefore, before investing in gold, it is necessary to know the present rate. This is where the importance of the gold price forecast comes in.

Gold is a safe investment because it usually moves in the opposite direction of regular markets. This is good to have when finances are uncertain. Moreover, its value keeps going up steadily. Gold does not change in price a lot. However, it keeps growing because more people want it. Thus, predicting its price over ten years can bring good returns. Therefore, to have a comprehensive view of the gold price forecast, this article will be your go-to guide.

Digging Out The History

Gold has been valuable for thousands of years. It became money around 550 B.C. during the Roman Empire and later with the gold standard in the 1800s. However, in 1971, US President Nixon ended this system, making gold more of a store of value. In the present times, the price of gold has seen a steady rise in valuation. Since the end of 2022, the price of gold has gone up by over 33%. It hit a record high of $2,165.50 in March 2024. Analysts, traders, and investors think this upward trend will keep going in 2024.

Factors Affecting Gold Price

Gold’s price and how it is influenced depend on various factors. This is due to the fact that it is a mature and well-established asset. Unlike stocks and bonds, gold is unique, so it behaves differently. Its role as a hedge means factors affecting other assets might affect it differently. Several factors influence the price of gold:

Supply and demand

Like any commodity, gold’s price is influenced by its supply and demand dynamics. Factors such as mining production, central bank gold reserves, and consumer demand for jewellery and electronics can affect its price.

Interest rates and monetary policy

The level of interest rates set by central banks and their monetary policy decisions can impact gold prices. Lower interest rates and expansionary monetary policies tend to increase the appeal of gold as it becomes relatively more attractive compared to interest-bearing assets.

Inflation and currency fluctuations

Gold is often seen as a hedge against inflation and currency depreciation. When inflation rises or the value of fiat currencies decreases, investors may flock to gold as a store of value, thereby driving up its price.

Investor sentiment

The perception of gold as a safe-haven asset during times of economic uncertainty or geopolitical tension can drive investor demand and affect its price. Changes in investor sentiment towards riskier assets like stocks and currencies can also influence gold prices.

Geopolitical tensions

Political instability, conflicts, and uncertainty on the global stage can increase demand for gold as a safe haven, leading to higher prices.

Market speculation

Speculative trading activities, including those in futures and options markets, can also influence short-term fluctuations in gold prices.

Physical demand

Apart from investment demand, factors such as industrial demand for gold in sectors like electronics and dentistry, as well as demand for jewellery, can affect its price.

Gold At The Centre of Forex Interest: Why?

Forex market players have been very interested in gold for the past year and a half. This interest is driven by several key reasons:

  • Many developing countries are moving away from using the US dollar. This trend was intensified when Russia’s gold and foreign reserves were frozen after the conflict in Ukraine. As a result, these countries are increasing their gold reserves to protect against inflation and the growing US debt.
  • Geopolitical tensions, like those between Ukraine and Russia and conflicts in the Middle East, are pushing up the price of gold. Central banks in regions like Asia, the Middle East, and Eastern Europe are buying more gold in response to these risks.
  • There are signs of a possible recession in the US and Europe. Bankruptcies are increasing, especially in sectors hit hard by rising energy prices and the end of government pandemic support.
  • The possibility of central banks cutting interest rates is also affecting the gold market. Both the US Federal Reserve and the European Central Bank are considering rate cuts to stimulate their economies, which could lead investors to move away from gold towards riskier assets.

Making The Prediction: The Approaches

There are three main ways to predict gold prices reliably:

Fundamental analysis:

This method tracks changes in monetary policy and other factors affecting precious metal prices. It looks at things like changes in the global financial system and actions by the US central bank. Important factors include changes in the federal funds rate, inflation expectations, currency movements, and import/export balances. It is also crucial to consider the economic situations of major gold-importing countries like India and China. Geopolitical tensions and changes in sanctions policies can also impact gold prices. Major gold-producing countries like China, Australia, Russia, and Canada also play a role.

Technical analysis:

This approach studies past gold price movements using charts, indicators, and other tools. It helps identify support and resistance levels, trend lines, and potential price breakouts or reversals. Long-term trends in gold prices can be analyzed using indicators like Moving Averages, RSI, MACD, and Bollinger Bands.

Market sentiment analysis:

This method involves assessing the mood of buyers and sellers in the market. It considers who has the upper hand at a given time. Tools for market sentiment analysis include surveys, social media monitoring, and specialized online platforms. It’s important to note that market sentiment can change rapidly, influenced by factors like forecasts from professional analysts or statements from figures like Fed Chairman Jerome Powell.

Prediction For 2024

The prediction and forecast for 2024 appear positive, especially after a bullish start to the year due to heightened geopolitical concerns. At the end of 2022, gold prices fell below $1650. But as 2023 began, more people turned to the gold market, pushing prices above $2000 an ounce. Gold is expected to remain attractive in 2024 due to concerns raised by several banks like Silicon Valley Bank, First Republic, and Credit Suisse. Moreover, revelations of fraud in the crypto market, particularly involving FTX, have increased interest in gold.

As fears of a global recession persist, larger funds and wealthy investors are increasing their exposure to gold, which tends to hold value during economic downturns. Central banks are struggling to combat inflation by raising interest rates. This has added to concerns about defaults, prompting traders to seek protection through gold and bond markets.

Despite the strengthening of the US dollar, gold is being used to safeguard wealth, leading to both assets rising in value. Inflation poses risks to most currencies, including the US dollar, but gold, being the original currency, is expected to continue performing well. Similar conditions in the 1970s and 1980s saw gold prices rise, providing a potential template for its performance amid current inflationary pressures.

Final Words

In investing, there’s always a risk of loss, but gold is considered one of the safest investments. It’s always in demand for jewellery, electronics and by central banks and investors. Gold’s supply is uncertain but limited, which keeps demand and prices high. Global instability and concerns about debt markets can drive investors toward safe assets like gold. People seek liquidity and safety. This makes gold one of their first choices.

Also read: What is the Difference between Trading and Investing?