BENZINGA: Gold Prices Continue On An Uptrend – Is It The Right Time To Buy The Metal Now For Profits In 2024?

Gold has had a remarkable run so far this year, continuing its strong performance from 2023. The precious metal ended last year at around $2,070 per ounce and, after an initial slide to below the $2,000 mark, shot up to a record high of over $2,450 in May. As we approach the latter half of 2024, gold has pulled back to around $2,300, but is still up around 11% since the start of the year and 27% since the October low of $1,813.

Gold is typically seen as a hedge against inflation and economic uncertainty, so with inflation starting to slow, along with strong growth trends and equity markets, it might have come as a surprise to some that gold has performed so well this year. However, there are myriad factors driving the price of gold. Let's look at some of these factors and what impact they could have on the gold price during the second half of 2024.

The Federal Reserve's Interest Rate Policy

A critical factor affecting gold prices in the coming months will be the Federal Reserve's stance on interest rates. This is because gold typically has an inverse relationship with interest rates, so a cut could mean that gold continues its uptrend.

The Fed rate has remained within the range of 5.25%–5.50% since July 2023 after rising by 525 basis points over 11 consecutive hikes since March 2022 in response to rising inflation. It is at its highest level in 23 years, and many experts think a rate cut will come soon.

Two-thirds of economists surveyed by Reuters in May said the Fed will cut its key interest rate twice this year, starting with a cut to 5.00%–5.25% in September. The proportion of economists with this view increased from just over half surveyed the previous month.

It should be noted, however, that while inflation has slowed somewhat, it remains above the 2% target. The Fed has said that we are not likely to see an interest rate cut until inflation has fallen further, and there is even a risk that inflation could rise again.

Economic And Geopolitical Uncertainty

As a safe-haven asset, gold thrives in times of economic and geopolitical uncertainty. Russia's invasion of Ukraine and the war in Gaza are likely contributing factors to the gold price surge over the last year.

This economic uncertainty is driving consumers and investors in China to buy gold at a record pace. According to Goldman Sachs, it is this robust retail buying in Asia, coupled with central bank accumulation, that is underpinning the gold rally.

Expert Predictions For 2024

With gold still in a strong uptrend, several financial institutions have updated forecasts made at the start of the year to reflect this ongoing strength.

Bank of America: Initially predicted gold to reach $2,400 in 2024; it is now saying it could reach $3,000 by 2025.

UBS: Previously predicted that gold would reach $2,200 in 2024. In its latest forecast, it says it will reach $2,600.

Goldman Sachs: Has updated its forecast from $2,133 to $2,700.

Citi: Now predicts the price of gold will rise to $3,000 by 2025, after a previous forecast of $2,400 this year.

Time To Buy Gold?

As we look toward the second half of 2024, several key factors point to a continued upward trajectory for gold. With ongoing geopolitical uncertainty, it remains a sought-after asset, while many expect the Federal Reserve to cut interest rates later this year. Expert predictions remain bullish, with some financial institutions even predicting a price of $3,000 by 2025.