To The Moon

In the past year, the focus on gold $Gold - main 2402(GCmain)$ has increased so much that even $Costco(COST)$ has entered the market and started selling gold bars online.

Gold prices topped $2,000 an ounce in November and are expected to continue rising through 2024. Analysts said the gains were driven by strong safe-haven buying amid geopolitical tensions and a modest decline in the dollar. However, some experts say gold may stabilize over the next year.

The World Bank's Commodity Outlook report pointed out that the escalation of conflict in the Middle East could increase the demand for safe-haven assets, leading to a sharp rise in gold prices.

BMI, a research firm owned by Fitch Solutions, forecasts a rise in gold prices in 2024, said investment funds are expected to flow into the gold market, based on factors such as global economic growth slowing from 2.6% in 2023 to 2.1% in 2024, a further weakening of the U.S. dollar and 50% chance of a shallow recession in the US economy, prompting the Fed to cut interest rates.

In an inflationary environment, gold is a good hedging tool that provides portfolio diversification and long-term value.

Gold and inflation

The recent surge in gold prices has been driven by persistent inflation. The Fed has raised interest rates several times, but inflation remains above its 2% target.

WisdomTree Investments expected high inflation to persist, from 3.1% at the beginning of 2024 to 2.60% by the end of the third quarter. Continued high inflation could drive gold demand and prices higher, a repeat of the historic bull market when gold hit a record $800 in 1980 .

Gold Forecast in 2024

Collin Plume, founder of Noble Gold Investments, stressed that gold was a crucial portfolio hedge during downswings. WisdomTree expects the price of gold to rise steadily in 2024, rising to $2,090 by the third quarter and looking as high as $2,300.

Bank of America and other analysts are bullish on gold.

The price of gold is expected to rise further on expectations of lower Treasury yields. FXEmpire said that if gold breaks the psychological level of $2,100, it has the potential to surge to $3,000. $Bank of America(BAC)$ redicted in April that gold prices could hit $2,200 by the fourth quarter, a forecast consistent with the current upward trend in gold prices.

The price of gold has risen from around $1,200 in October 2018 to $1,974 now, an increase of more than 50% in five years. While it's down slightly from its 2023 peak, experts, including Alex Ebkarian, said the decline is likely to be temporary. Many analysts, including Sean Casterline of Delta Capital Management, believed gold prices have consolidated before going up over the past few years.

Will the rise in gold prices last?

These forecasts point to a continuation of the recent upward trend in gold prices. Gold hit an all-time high of $2,071 on Dec. 1 and has posted gains in seven of the past eight weeks, up 12% for the year.

The World Gold Council described three scenarios for the economy next year and the impact on gold prices, including a 5% to 10% probability of economic expansion (growth does not slow down), causing gold prices to fall; The probability of a soft landing of the economy is 45% to 65%, and the probability of a recession is 25-55%, which leads to a significant increase in gold prices.

Invest in gold in 2024

Historically, gold has appreciated in an environment of geopolitical turmoil, inflation and high interest rates, making it a suitable investment. However, it should be pointed out that the purpose of investing in gold is to preserve value rather than to earn short-term high returns.

Considering the medium-and long-term nature of gold, it is recommended to use a "buy and wait" strategy rather than timing. Moreover, unlike the dollar, the scarcity of gold makes it a limited asset. Experts recommend that the proportion of gold in a diversified portfolio should not be higher than 10%.