Gold prices (GC=F) are expected to rise sharply in the second half of the year, surpassing the previous record of $2,480.25 (£1,918.31), according to analysts.
The main factors influencing the price of gold in the second half of 2024 are said to be Federal Reserve interest rates, geopolitical risks and central bank bond purchases.
“Gold continues to shine on growing speculation about lower US interest rates this year. Recent dovish comments from Fed officials, complemented by a generally weaker dollar and subdued US Treasury yields, have whetted appetite for the precious metal,” said Lukman Otunuga, senior research analyst at FXTM.
The London Bullion Market Association (LBMA) said many analysts were surprised by the strength of gold prices in the first half of the year.
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According to the latest analysis, all analysts except one expect the gold price to surpass the record high of $2,480.25 set on July 17, 2024 in the second half of the year. The average forecast is that the gold price could reach $2,547.
Gold prices rose slightly on Wednesday, but only marginally. Gains were capped by the strengthening of the US dollar against other major currencies. Ricardo Evangelista, senior analyst at ActivTrades, said:
“Gold prices are hovering above the $2,400 mark as the backstory for traders remains positive due to the recent slowdown in US economic activity and falling inflation, which has increased the likelihood of a Fed rate cut in September.”
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“However, gold price gains are capped by uncertainty about the outcome of the US presidential election.”
“Many see Donald Trump as the favorite, which would mean a more protectionist administration in Washington.”
“This scenario brings with it a stronger dollar, as more expensive imports could boost inflation and lead to higher interest rates, which in turn will create headwinds for the price of the precious metal.”
However, analysts are unanimous in expecting the price of gold to fall by the end of the year. The average forecast for the year-end price is $2,395, about 6% below the expected average high.
The original full-year average price forecast, released in early February, was $2,059 – 7.1 percent below the actual average for the first six months of the year ($2,205) and 12.5 percent below the newly forecasted full-year average.
According to the World Gold Council, gold prices rose in the second week of July, exceeding the $2,400/ounce mark, amid increased expectations of a change in the US Federal Reserve’s monetary policy, which in turn led to a decline in the US dollar and bond yields.
Gold has gained 16% this year, making it one of the best-performing assets globally. However, high prices in 2024 had led to subdued demand in the Indian market, the world’s second-largest gold consumer.
“The (gold) price surge has stifled physical markets in South and Southeast Asia, buying has dried up and some selling has started again. This is not unusual and buyers will return once they get used to the new price range,” StoneX analyst Rhona O’Connell said in a note.
Important gold price indicators for 2024 according to LBMA:
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Starting price (January 2): 2,074.90 €
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Half-yearly price (28 June): 2,330.90 €
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Record high (July 17): 2,480.25 USD (PM)
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Annual low (February 14): $1,985.10
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H1 average: $2,205.25
Analyst forecasts (as of February 1, 2024):
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Highest prediction: $2,405
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Lowest forecast: 1,781 USD
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Expected annual average: $2,059
Revised analyst forecasts (as of July 16, 2024):
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Highest prediction: $2,650
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Lowest forecast: 1,985 USD
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Maximum forecast at the end of the year: $2,600
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Forecast for year-end low: $2,160
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Revised average forecast for the full year: 2,317 USD
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