Since 2020, wave after wave of tumult and crisis have swept the globe. The COVID pandemic, the Russia-Ukraine war, the Silicon banking crises, and more, have sent wise investors looking for safe-haven assets in a volatile world. Out of these circumstances, a mega rally for gold was born.1
In 2023, gold rose an incredible 15%, and by December, gold prices reached a record-setting high of $2,315 an ounce.2
Today, tensions continue to simmer. Global appetites for gold appear undiminished. Will the bullion boon continue? Both analysts and key indicators suggest that the precious metals' rally seems far from over.
The Geopolitical Chessboard
Last year, the collapse of Silicon Valley Bank and the Hamas-Israel conflict were significant catalysts that propelled gold to new heights. In fact, the World Gold Council (WGC) estimates that these events alone contributed to a 3% to 6% increase in gold's performance over the year.3
Looking ahead through 2024, the landscape appears no less fraught with challenges. Major elections are taking place in key economies such as the U.S., the EU, Taiwan and India. The resulting political uncertainty means the clamor for the sanctuary of assets like gold will likely intensify.
Beyond politics, the threat of upheaval is ever-present. Iranian-backed Houthi Rebels are attacking shipping lanes in the Red Sea. Both Iran and Israel have launched cross-border missile strikes. Escalations of these events could elevate energy prices and tensions, both increasing the demand for precious metals.3
Central Banks’ Gold Buying Binge
Central Banks have long recognized the value of gold as a cornerstone of monetary stability. However, in recent years we have seen a rapid increase in purchasing, with Central Banks stockpiling gold in record amounts.3
In the first six months of the 2023, Central Banks accumulated gold at a breakneck rate that set records. Third quarter (Q3) purchases remained robust, marking the second-highest Q3 total on record. The WGC notes that Central Bank demand alone added over 15% to gold's 2023 performance.5
Who was behind the shopping spree? The Central Banks of BRICS nations China, Russia, and India snapped up billions in gold in 2023. This frenzy has continued into this year, as China and Russia have continued stocking up in January.7
A Universally Trusted Asset
The rationale behind the Central Bank buying blitz: a quest for diversification away from the U.S. dollar. This is primarily driven by China and is motivated by the desire to reduce reliance on the US dollar. Analysts expect that this ‘de-dollarization’ trend will continue to contribute to demand in 2024.4
The BRICS Factor: A New Gold-Backed Currency
It has been labeled an "economic wrecking ball." The BRICS Alliance currently includes Brazil, Russia, India, China and South Africa. And analysts predict that the BRICS alliance may launch a new gold-backed currency. As Non-Western nations divest from the dollar due to its weaponization with sanctions, the stage is set for an alternative to come in: gold. 6
BRICS has the potential to include twenty more nations. It could encompass 30% of the world's surface area, 40% of its population, and a third of the global GDP. Of note, Saudi Arabia was admitted in January. With two of the world's largest energy producers - Russia and Saudi Arabia - in the alliance, BRICS could bring an end to the petrodollar. Which could mean saying goodbye to the era of the greenback and further cement gold's position as a key asset in the economic strategies of emerging markets.
Fed Rate Cuts & Predicted $2,200 Highs
In addition to the demand created by geopolitical tensions and global Central Banks, homegrown policies of the Federal Reserve are set to shape the price of gold as the year progresses. The Feds announced three rate cuts in 2024. Typically, lowered interest rates boost gold prices, as bonds become less appealing.8 In fact, from 1990 to today, average gold prices have been 6% higher for 30 days after the first rate cut.5
“We are quite positive on gold over the next year. We think a Fed easing policy will be quite supportive of gold.” UBS’s precious metals strategist Joni Teves says. The strategist expects gold to hit $2,200 an ounce by the end of 2024, breaking existing records.9
A Bullish Sentiment for 2024
Leading analysts uniformly agree that gold's performance in 2024 will continue to be positive. Sustained purchases from Central Banks will help maintain its price. “Even if 2024 does not reach the same highs as the previous two years, we anticipate that any above-trend buying should provide an extra boost,” the WGC noted in its “Gold Outlook 2024”.5
A Golden Horizon: Investment Insights
Looking ahead, the consensus among analysts is bullish on gold. Central Bank buying, renewed investor interest, and the Fed's interest rate cuts, are driving predictions of prices of $2,200 by year-end.9 Gold's role as a portfolio stabilizer remains uncontested. Gold presents a compelling case for investors seeking safety and diversification. And vehicles like Gold IRAs are an attractive entry point.
Conclusion
With a whirlwind of geopolitical and economic uncertainties, the appeal of gold endures as a safe haven and investment asset. Geopolitical developments and Central Bank strategies will be critical in sustaining gold's demand. For those navigating the unpredictable waters of the financial markets, the wisdom of incorporating gold into their investment portfolio, especially through Gold IRAs offered by entities like American Hartford Gold, appears more relevant than ever. To learn more about this attractive option, you can explore American Hartford Gold reviews.
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Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.
Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients. He has significantly expanded the AHG workforce and opened a third office in Florida.
Max's dedication to upholding American Hartford Gold's industry-leading standards is reflected in its accolades. American Hartford Gold has made four high ranking appearances on the prestigious Inc. 5000 List of America’s Fastest-Growing Private Companies. AHG holds an A+ Rating from the BBB and a 5-Star Rating on Trustpilot with thousands of 5-star American Hartford Gold reviews. American Hartford Gold is the only precious metals company trusted and recommended by Bill O’Reilly.
AHG offers investment-grade gold and silver coins and bars at competitive prices. Clients also benefit from its buy-back commitment with no back-end fees. To learn more, visit American Hartford Gold.
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1.https://www.actionforex.com/contributors/fundamental-analysis/536733-can-rate-cuts-and-geopolitics-propel-gold-to-fresh-record-highs/
2. https://www.investopedia.com/gold-price-history-highs-and-lows-7375273#:~:text=An%20all%2Dtime%20high%20in,still%20the%20peak%20for%20gold.
3. https://www.cnbc.com/2023/12/08/geopolitics-central-banks-could-keep-gold-demand-hot-in-2024-world-gold-council.html#
4. https://www.cnbc.com/2024/02/02/gold-demand-hit-record-highs-in-2023-amid-geopolitical-risks-china-weakness-.html#
5. https://internationalbanker.com/brokerage/can-gold-prices-scale-even-greater-heights-in-2024/
6. https://markets.businessinsider.com/news/currencies/dedollarization-brics-currency-wars-dollar-international-trade-central-bank-reserves-2023-11
7. https://watcher.guru/news/brics-continue-gold-buying-spree-in-2024
8. https://apnews.com/article/federal-reserve-inflation-prices-interest-rates-cuts-5880d78c4664484cf366bb1aeb2bb63d
9.https://www.cnbc.com/video/2023/12/05/gold-could-hit-2200-by-the-end-of-2024-ubs.html
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