Three Factors Driving Gold Prices to Record Highs in 2024
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Three Factors Driving Gold Prices to Record Highs in 2024

In 2024, gold prices shattered previous records, driven by a weaker US Dollar and expectations of Federal Reserve rate cuts.
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Gold prices have been rallying in 2024 and setting new highs for the precious metal. Gold started 2024 trading at $2,062.94 and is now up around 13% over the year. While it is hard to pinpoint a single reason that is pushing the gold rally forward, there are a few factors that are significantly pushing the price higher this year.

Three Factors Driving Gold to New Highs in 2024

The gold market experienced a significant surge this year, with prices reaching new all-time highs. A key factor contributing to this rise is the subdued performance of the US Dollar.

The US Dollar Index (DXY), a measure of the dollar’s strength against a basket of foreign currencies, has slightly decreased, falling from four-month highs of 105.00 to 104.70. This decline has made gold more attractive to investors holding other currencies, supporting gold’s ascent to surpass $2270 per ounce.

Investor expectations regarding the Federal Reserve’s monetary policy have also played a crucial role in bolstering the gold market. Anticipation that the Fed will cut interest rates three times in 2024 has been a driving force.

This optimism is partly based on February’s core Personal Consumption Expenditure Price Index (PCE) figure, the primary inflation gauge used by the Fed, which recorded its lowest reading in two years. Such data suggests that the Fed may adopt a more accommodative policy stance, encouraging investment in gold.

Moreover, the economic landscape has influenced gold prices. Gold prices have surged despite robust US economic indicators, such as the Manufacturing Purchasing Managers’ Index (PMI) returning to expansion territory and the US economy displaying more robust growth compared to other developed economies.

This trend is attributed to investor confidence in the Federal Reserve’s projected interest rate cuts, fueled by the latest US inflation data aligning with the Fed’s targets for inflation control. Such expectations have kept the appeal of gold strong among investors.

Gold Price Recap for 2024

2024 has marked a significant milestone, with gold prices reaching unprecedented levels. In the early part of the year, the price of gold (XAU/USD) exceeded $2,270 per ounce, setting a new all-time high and surpassing the previous record of $2,223 established on March 21.

As of April 02, 2024, the price stood at $2,259.10 per ounce, marking a considerable increase from the average closing price of $1,943.00 in 2023. This highlights a robust upward trend in gold prices over the past year.

Technical analysis further evidences the strength of the gold market. Short-to-long-term Exponential Moving Averages (EMAs) and the 14-period Relative Strength Index (RSI) near 78.00 indicate strong demand and upside momentum.

Do you think the gold rally will continue through 2024? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.