What fate for the price of gold in the second half of 2024? Experts and investors are wondering whether bullion can still sustain the run recorded since the beginning of the year or whether it will be pushed lower by new catalysts.
There monetary policy of central banks, with the Fed more aggressive and uncertain on rate cuts compared to the ECB, geopolitical tensions, the persistence of inflation beyond the 2% target, the dollar’s trajectory that may result and the role of China as the main buyer of the precious metal they are at the center of attention of those who invest in gold.
After the latest economic developments which have seen the Federal Reserve remain very cautious about easing monetary policy, even with cooling inflation, the price of gold he was put under pressure. 2024, in the second half of the year that has just begun, could see a slowdown in the excellent performance of ingots that has emerged so far.
These factors will be crucial for the price of gold in 2024
The price of gold (XAU/USD) fell on Thursday 13 June and bullion futures are also under pressure.
Several factors have moved in the last few hours, directly influencing the metal. The Federal Reserve’s (Fed) aggressive surprise on Wednesday, to a large extent, was countered by weaker US consumer inflation data. Indeed, policymakers now predict a only rate cut in 2024 compared to the three expected in March, which, in turn, is seen as a key factor driving flows away from gold.
Meanwhile, the movement of Fed projections it impacts US Treasury bonds, increasing their yields, and offers another reason to strengthen the US dollar. This context is seen as bearish for the price of gold denominated in US dollars, even if the geopolitical tension in the Middle East and the renewed one political uncertainty in Europe they could help limit deeper losses.
Then there is the factor China. The dragon stopped buying gold as a reserve in May after the precious metal rose to a record high, ending an 18-month buying spree. According to data published last week, gold held by the People’s Bank of China it remained unchanged at 72.80 million troy ounces in May. This marked the first time that the country’s central bank did not increase its reserves since October 2022. Gold therefore remained vulnerable to more downward pressure.
In the first quarter of 2024, demand for the yellow metal from central banks recorded its strongest start to the year yet, with China being the largest buyer.
“There are many reasons driving gold right now…, but one of the main factors is China”Ruth Crowell, CEO of the London Bullion Market Association, told Reuters on the sidelines of the Asia Pacific Precious Metals conference in Singapore.
“Typically China and Japan are budget-conscious buyers, but given the state of the economy, real estate challenges and stock markets, gold is a safe choice…I think gold will be of interest for some time”he added.
It should be noted that gold has risen by almost 12% since the beginning of the year, especially in a context of optimism for a Fed turn towards monetary easing this year. Also the question how safe haven asset given the ongoing conflicts, as well as purchases by central banks, they supported the increase in prices. Now analysts are wondering what will happen in the second half of 2024.
Price of gold, what can happen at the end of 2024?
The gold’s meteoric rally towards consecutive record highs shows every sign of continuing into the second half of 2024, as the fundamental reasons for support remain firmly in place, even if $3,000 an ounce seems just out of reach, according to some experts polled by Reuters.
As investors seek clarity on the timing of interest rate cuts by the Federal Reserve, the US election in November is likely to add more volatility to the market, analysts say.
Most traders remain bullish on gold, but the possibility of the precious metal surpassing the $3,000 an ounce seems remote at this point, they said. “It’s not about any particular factor holding gold back, but rather that $3,000 would mean another 30% from here, which is quite a lot given that we’ve already made significant gains”said Nikos Kavalis, CEO of Metals Focus.
In an analysis, ING highlighted that if the Fed continues its cautious approach to easing, gold prices risk a pullbacks: “We expect that i gold prices remain volatile in the coming months as the market reacts to macro factors, following geopolitical events and Fed rate policy. We see prices averaging $2,300/oz in the second quarter and an annual average of $2,255/oz in 2024.”
The estimate is for prices to peak in the fourth quarter, averaging $2,350/oz, assuming the Fed starts cutting rates in the second half of the year, the dollar and yields weaken.
