The gold market has witnessed a number of major global events throughout 2023 that will greatly impact its value. Chief among these were the banking crisis and geopolitical tensions. Gold prices rose above $2,000 in preparation for the new year. So what are the expectations for gold in the new year?
Gold will continue to shine in 2024
cryptokoin.comAs you follow from , the dual impact of financial system distress and geopolitical instability has underlined gold’s role as a stable investment in turbulent times. Gold prices will benefit from loosening monetary policy, rising geopolitical risks and strong central bank purchasing in 2024, according to ANZ Bank strategists. In this direction, ANZ increased its 12-month target from $ 2,150 to $ 2,200. Bank strategists explain the reason for this as follows:
Gold looks set to be well supported in 2024 by several factors: the start of a rate-cutting cycle in the US, slowing economic growth, a weaker USD, strong central bank purchases and rising geopolitical risks. Weak investment demand presents an opportunity for investors to increase their positions in gold. We raised our 12-month price forecast to $2,200 from $2,150.
The impact of a possible recession on gold prices
Uncertainty and recession as catalysts for gold
In the event of a global recession, gold’s historical performance as a safe-haven asset typically causes its demand to increase. Investors often look for effective protection in their portfolios. That’s why they often choose gold for its stability and potential growth in volatile markets.
Gold’s dual role and the impact of recession
Gold’s unique position as both a consumer good and an investment asset means its performance is versatile. In recession conditions, economic growth weakens and inflation decreases. Additionally, interest rates become likely to fall. Historically, these conditions have favored gold, which has shown resilience and positive performance in past recessions.
Geopolitical risks and central bank demand
Amid the recession, rising geopolitical risks and key elections in key economies, combined with steady central bank purchasing, provide additional support to gold prices.
Interest rates and economic indicators
Economic indicators such as Composite PMI, manufacturing PMI, real earnings, household savings and unemployment rates, especially the interest policies of the US Federal Reserve, have an impact on the market performance of gold. In scenarios where persistently high interest rates lead to recession, gold’s hedging role becomes more evident.
Strategic value of gold in investment portfolios
Despite historical patterns pointing to different performances in different economic scenarios, the 2024 context marked by geopolitical risks and strong central bank demand could alter gold’s usual trajectory. Gold provides stability and diversification, especially during uncertain economic times. Thus, it preserves its strategic value in investment portfolios.
Weekly gold prices technical analysis
Market analyst James Hyerczyk evaluates the technical picture for gold. On gold’s weekly chart, we observe a classic ascending triangle formation, an indicator often associated with bull market sentiment in technical analysis. This formation is characterized by a horizontal resistance line and a rising support line. We clearly see the resistance line at $2,070.63, which marks the upper boundary of the triangle. Meanwhile, the support line started its upward trajectory at $1,616.67. It later recorded a second high at $1,810.46.
This pattern typically indicates the possibility of an upward breakout. Hence, it is an indicator of a positive turn in the direction of the market. In line with the principles governing ascending triangles, the projected target for gold prices following a breakout is estimated to be around $2,524.59.
This target, derived directly from the natural structure of the formation, underlines a significant potential for gold. It also reflects a promising outlook for gold traders and investors.
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