Economists at TD Securities believe it could rise to 2,100 in the coming months amid a possible dovish stance by the Federal Reserve.
Over the past week, gold prices have risen significantly amid the ongoing conflict in the Middle East and growing confidence that the Federal Reserve is nearing the end of its rate-hike campaign. Analysts believe the precious metal is just at the beginning of its rally and estimate it could reach $2,100 in 2024 amid a possible dovish stance by the Fed.
Analysts believe gold could reach more than $2,000 in 2024
Prices have surged recently, rising more than 2% in the past week to $1,973. The rally was partly driven by ongoing conflicts in the Middle East, as geopolitical risks typically increase the appeal of safe-haven assets.
However, according to market experts, this may not be the end of the rise in gold price.
Specifically, economists at TD Securities said gold saw a respectable performance this year in the face of the Federal Reserve’s restrictive policy. Now, the US central bank is expected to take a more accommodative stance, which could push the bullion towards $2,100. The projection estimates that gold could reach that limit in late 2023 or early 2024.
“We believe the combination of the Fed dovish pivot expected by gold traders in late 2023/early 2024 and strong official sector purchasing should drive prices to $2,100+ on a sustained basis in 2024.”
– wrote economists at TD Securities.
Positive outlook for gold prices in 2024
The key factors behind the bullish forecasts for gold relate to expectations of a more favorable environment for the precious metal in the first quarter of 2024.
Primarily, demand for bullion is rising amid worsening geopolitical headwinds, especially the recent Gaza bombing and the prospects of a wider war in the Middle East, which could involve Iran, Lebanon and other countries including the US.
Second, amid declining inflation rates and the Federal Reserve possibly reaching the end of its interest rate-hike cycle. As a result, this could pave the way for the Fed to adopt a more dovish stance and start cutting rates.
But at the same time, many economists still fear a recession in the US economy. In that case, gold’s appeal will increase, prompting some analysts to call for a target as high as $2,500 by the end of 2024.
Precious metals, especially gold, perform well in periods of economic turmoil such as recession or stagflation because they are a reliable store of value. Bullion hit an all-time intraday high of $2,072.5 in August 2020, at the peak of the coronavirus pandemic, a period of unprecedented pressure on global economies.