Experts anticipate a continuation of the rise in gold prices to new record levels in 2024, spurred on by the American interest rate cut at the end of the first quarter of the year, following a year of ascent due to geopolitical tensions and a curb on further interest rate hikes by major central banks.
What About Gold's Performance in 2024?
Raed Hamed Al-Khadr, the chief market analyst at Equity Group, shared with Al Jazeera Net his expectation that gold prices might surpass $2100 per ounce during the first quarter of the current year, and it may even strive to reach a new historical peak.
Going even further, Daniela Corsini, an economic expert at Intesa Sanpaolo, projected that if the Federal Reserve (the American central bank) adopts a monetary easing policy, and there is an unexpected escalation in geopolitical risks, the price per ounce could reach $2300 in the new year, as reported by Reuters.
Al-Khadr points out that the relationship between gold and the dollar is typically inverse. If the American economy improves and the bank moves towards a monetary tightening policy and interest rate hikes, it might bolster the dollar and drive investors away from yield-less assets like gold. Moreover, as the economy in the nation improves, the bond yield rises, which is also an indicator of potential inflation increases.
Echoing this sentiment is Asim Mansour, the chief market strategist at Orbex Egypt, who told Al Jazeera Net that gold will see significant gains in 2024. This expectation is particularly in light of actions by central banks, especially the People's Bank of China (the Chinese central bank), to increase their holdings of the precious metal after partially divesting from the dollar due to its use as an economic weapon in numerous crises, notably the Russian-Ukrainian war.
Overall, Mansour predicts that the gold ounce will move towards a new pricing range this year and advises buying during this period. He envisages a very bullish outlook for 2024, with the ounce stabilizing above two thousand dollars, within the $2100 range.
Performance in 2023
Gold recorded its best annual performance in three years during 2023, supported by expectations that the Federal Reserve would start easing its monetary policy in March 2024.
Gold ended 2023 at $2062.49 an ounce at the final settlement of the year's trading, but the American futures contracts marked $2074.50 an ounce.
The precious metal rose about 14% since the beginning of last year amidst volatile performance, as prices fluctuated between lows near $1800 earlier in the year and a record high of $2135.40 on December 4th.
Al-Khadr notes that an increase in risk aversion due to conflicts in the Middle East in 2023 contributed to higher demand for gold as the primary safe haven for investors during crises.
Downward Pressures
According to Ahmed Najm, head of market research at XS.com, 2023 saw downward pressures before October with the persistence of a strict monetary policy, but it concluded with significant price increases starting from October, amidst expectations of Federal Reserve interest rate cuts.
Regarding other precious metals, silver settled during the year's trades at $23.79 per ounce, while platinum dropped by 7.3% to $992 by year-end.
Commodities
In commodity markets, the most active corn futures in Chicago ended the year with the largest annual loss in a decade. Wheat and soybeans also saw sharp annual drops after ample Brazilian crops and robust Black Sea trade alleviated concerns about weather and war.
Overall, the year saw the most active corn contract drop by 31%, marking the largest decline since 2013 for the globally most traded crop.
Wheat fell by 21% this year, and soybeans lost 15%.
Grains and vegetable oils ended a series of years of price gains related to crop deficits, the COVID-19 pandemic, and the Russian-Ukrainian war.
Record corn crops this year in Brazil and the United States, along with the highest-ever Brazilian soybean production, helped to offset severe drought in Argentina.
Yet an improvement in rainfall towards the end of the year in Argentina allowed farmers to make significant headway in upcoming corn and soybean plantings.
Next year, farmers are likely to feel the effects of lower prices and prioritize soybean cultivation in the United States.
Calm prevailed in the grain markets thanks to large Russian wheat exports, which also reaped a bumper harvest this year, and the recovery of grain shipments from Ukraine after Kyiv activated a new maritime corridor.
