Gold Price Forecast 2024: Interest Policy and Inflation

In the Forex market, gold is a form of currency. The peculiarity of gold is that it can only be traded against the US dollar. The internationally accepted symbol for gold is XAU. It is known to be a “safe haven” asset, and its value is expected to increase in times of economic volatility and uncertainty.

According to the technical forecast, there seems to be upside potential for gold prices in 2024. This prediction is confirmed by the presence of the Relative Strength Index (RSI) above the 50 level and the XAU/USD pair within the upper half of the long-term upward regression channel.

However, we should note that there may be a strong support at the $1960-$1950 level, and if this support fails it could lead to gold prices falling towards lower areas, such as $1880 and $1850. Weekly declines in gold prices should be monitored, and if they are reduced below the mentioned levels, this could attract more sellers to the door of a drop towards $1,800, which represents the lower limit of the upward regression channel.

Gold hit a new all-time high in 2023 and is up more than 10% year-on-year. Federal Reserve policy and the state of the global economy are among the main factors that may affect gold prices. Technical forecasts indicate that the upside potential remains until 2024. After the rise seen in the fourth quarter of 2022, the price of gold continued to rise at the beginning of 2023. After recording impressive gains in March, the XAU/USD pair made a downward correction in Q3 before hitting a new record high above $2,100 in early December.

The weekly chart confirms gold’s bullish bias in 2024. The Relative Strength Index (RSI) remains comfortably stable above the 50 level, where the 20-period RSI-based moving average lies.

Gold price forecast for 2024

The state of the US economy, and the Fed’s shift: After the last monetary policy meeting of the year, the Fed left interest rates unchanged at 5.25%-5.5% due to the steady improvement in the outlook for gold. In his post-meeting press conference, Chairman Jerome Powell said it would be too early to declare victory over inflation, but acknowledged the question of when it would be appropriate to start cutting interest rates on the horizon. “Policymakers want and talk about the right time to cut interest rates,” Powell said. “We are very focused on not making a mistake and making interest rates too high for too long.”

Markets expect a roughly 70% chance that the Fed will cut interest rates by 25 basis points in March. By December 2024, there will likely be a reserve ratio of approximately 60% and the Fed interest rate at 3.75%-4% or lower. He points out that the market situation aims to reduce interest rates to the lowest possible extent next year, which may leave room for the value of the US dollar to rise.

The Fed is also relatively confident that the United States will avoid a recession. In the third quarter, GDP expanded at an impressive annual rate of 5.2%. Since inventory accumulation in that period was the primary driver behind the expansion, it would not be surprising to see a sharp decline in the growth rate in the first half of 2024.

US bond yields fall, and the US dollar weakens. However, a slowdown in the global economy may weigh on demand and limit precious metal’s gains. On the other hand, the lack of progress in Fed’s efforts to reduce inflation could cause the XAU/USD pair to turn bearish. The outcome of the 2024 presidential election in the United States, geopolitical situations

Gold price in 2023

US Banking Crisis and Persistent Inflation Markets have become optimistic about the US Federal Reserve taking its foot off the tightening pedal at the end of 2022. As US Treasury yields turned south and continued to fall to start 2023, gold maintained its upward momentum and rose almost 6% in January.

As the decline in inflation slows in early 2023, gold has entered a consolidation phase, with markets reevaluating the Fed’s policy expectations. However, in March, turmoil in the US banking sector provided a boost to the XAU/USD pair and the pair rose above $2,000 for the first time in a year. Within five days, three small and medium-sized US banks – Silicon Valley Bank, Silvergate Bank and Signature Bank – failed, triggering a flight to safety. As the Fed and regulators responded quickly to ease tensions in financial markets by establishing the Term Bank Financing Program (BTFP), gold regained part of its monthly uptrend and posted small gains in April.

Meanwhile, US inflation proved more persistent than initially thought in the second quarter of the year, while conditions in the labor market remained relatively tight. In response, the Fed continued to raise interest rates. The US central bank chose to raise interest rates by 25 basis points at each of its first three meetings this year, raising interest rates from 4.25% to 4.5% to 5% to 5.25%. Amid easing concerns about banking turmoil turning into a full-scale crisis and US Treasury yields rising, gold closed May and June in negative territory.

After a pause in June, Fed raised interest rates again by 25 basis points to 5.25%-5.5% in July. Fed refrained from closing the door on further tightening as the US economy grew at a stronger-than-expected pace and the increase in the non-farm payrolls report consistently exceeded expectations.

How does gold relate to other assets?

Gold has an inverse relationship with the US dollar and US Treasuries, both of which are major reserve assets and safe havens. When the value of the dollar declines, gold tends to rise, allowing investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risky assets. A stock market rally tends to weaken the price of gold, while selloffs in riskier markets tend to favor the precious metal.

What is forex gold? Gold is traded in the spot market where spot gold is priced in US dollars per Troy Ounce. Since 1919, the most common criterion for determining the price of gold has been to fix the price in London, through a twice-daily telephone meeting between representatives of five gold bullion trading companies on the London Bullion Market.

What is expected in gold prices? According to the latest long-term forecasts, the price of gold will reach the level of $2,627 by the end of 2025, then to the level of $2,676 by the end of 2026. Gold will rise above the $3,000 level in 2027, the $4,500 level in 2030, and the $5,200 level. Dollar in 2033. This is one of the most bullish expectations for gold prices.

How many grams is an ounce of gold worth? An ounce, other than gold and silver, is equivalent to 127 grams, or forty dirhams. An ounce of silver is equal to 119 grams, and an ounce of gold is equal to 29.75 grams. Rather, it differs according to the different countries: an ouguiya in Egypt = 34 grams, and in the south and north of the Levant, for example, = 200 grams, while in Homs, an ouguiya = 250 grams.

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