2023-12-13 00:00:00
Written by Islam Saeed Wednesday, December 13, 2023 02:00 AM
The World Gold Council published a report on the performance of gold for the year 2024. The report indicated that gold may move within a range, but it will witness clear fluctuations due to the overlapping factors affecting it during the coming year, whether the performance of the American economy and the policy of the Federal Reserve, or geopolitical developments and demand by global central banks.
Expectations indicate that the US economy may witness a “soft landing” in 2024, as the Federal Reserve can reduce inflation to its target without the US economy falling into an economic recession affected by high interest rates.
The soft decline of the economy does not provide strong support for gold since demand for the precious metal increases in times of economic recession and crises. Also, until now, the Federal Reserve’s policy has not been clearly stated regarding reducing interest rates, which keeps gold expectations facing a continuing obstacle, which is the continuation of high interest rates for a longer period than the time.
Despite this, the World Gold Council believes that support will come to gold from geopolitical developments, since the two most important factors affecting gold prices in 2023 were the collapse of Silicon Valley Bank in the United States and the Hamas movement’s attack on the Zionist entity, so geopolitical events caused a rise in the price of gold between 3% and 6% throughout the year.
The year 2024 will witness major elections globally, including in the United States, the European Union, India, and Taiwan, and investors’ need to hedge gold more than usual in their portfolios is likely to increase during these periods.
Also, central bank gold purchases are expected to be an important factor in supporting gold during the coming year, as central bank purchases were a major source of demand for gold in 2023, which is expected to be a record year in gold purchases and this will continue in 2024 as well.
The World Gold Council believes that demand by central banks helped gold rise by 10% or more during the year 2023, and even if 2024 does not witness record purchases, the continuation of purchases in itself at a high pace will work to support gold.
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