Market Insights

6 Potential Catalysts for Record-High Gold Prices in 2024

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Will gold prices soar in 2024 -- here are the potential catalysts that could send gold sky-rocketing

Gold’s remarkable ascent to an all-time high of $2,152 per ounce in December 2023 was driven by a mix of economic and geopolitical reasons.  

As we head into 2024, here are 6 catalysts that may help push gold to a new record high: 

Catalyst #1: Fed Pivot

On December 13th, Fed Chief Powell sent shockwaves through the markets when he announced the Fed’s plans to cut interest rates three times next year. 

In response, a flood of investor capital moved out of interest-yielding assets. Bond yields dipped. And The Wall Street Journal declared, “When Bond Yields Dropped, the Everything Rally Kicked Off.” 

Including gold. 

Within hours of Powell’s rate-cut comments, gold rallied 3.4% as flight capital poured into the precious metal.  

Gold thrives in low interest environments. And Barron’s says, as interest rates drop “gold is likely to maintain its current rally in 2024.” 

Catalyst #2: Geopolitical Conflicts 

Geopolitical turmoil can have a profound impact on gold’s price. 

After the Russian invasion of Ukraine in Q1 of 2022, for example, gold jumped 6%.  

Following the October 7th start of the Middle East conflict, gold surged 7.5%.  

And now, continuing conflicts in both regions may spread to other regions, disrupt oil supply chains and affect energy markets—which could trigger further volatility and uncertainty in several other markets… including gold. 

Catalyst #3: More Central Bank Gold Buying 

In 2022, central banks made the biggest annual purchase of gold on record. 

In 2023, global central banks continued hoovering up gold at an accelerated rate and in astonishing amounts. And the World Gold Council estimates the gold purchases added at least 10% to gold’s performance over the last 12 months.  

In 2024, central bank gold buying will continue, says the WGC, and this may help push global demand for gold up against the world’s limited supply. 

Catalyst #4: Global Election Fallout  

Over 40 countries—including the US, the UK, China, India, Taiwan, South Korea, Ireland and South Africa… representing more than 50% of the world’s GDP—are holding major elections in 2024 that will shape economic policy and may have far-reaching ripple effects on global markets. 

In the US, the presidential election may keep retail demand for gold high as investors seek shelter from financial risks baked into the uncertainty of an unfavorable leadership choice.  

Catalyst #5: Potential Debt Crisis  

In November 2023, the US government paid almost $80 billion in interest payments… which is more than $2 billion per day.  

To help reduce the debt, Washington could cut spending, but history tells us the chances of significant spending cuts are… low. Especially in an election year, when government spending tends to increase as parties try to “buy” votes. 

Add increasing welfare program costs against a backdrop of dwindling tax revenue to the equation… 

…and it’s easy to see how we may face much higher national debt and interest payments going forward. 

Servicing the debt and interest payments may require new money printing, which may devalue the dollar through simple dilution, and this may put more upward pressure on gold’s price. 

Catalyst #6: Potential Recession (and Sticky Inflation)

While many news reports trumpet receding recession fears, former Kansas City Federal Reserve Bank president Thomas Hoenig told Fox he thinks there is “still a good risk of a recession, and so does the Fed.” 

Statista estimates the probability is 51.84%. 

And the World Gold Council says, “A global recession is still in the cards. This should encourage many investors to hold effective hedges, such as gold, in their portfolios.” 

This may be a wise move because, as UBS bank commodity analysts note, “Gold averages 16% annual returns in recessions…”  

And while an eventual post-recession economic recovery could slow gold’s meteoric rise at some point, the continued risk of a recession in 2024 might supply the support needed for gold to overcome any headwinds on the way to a record high. 

What about inflation? 

Washington says the Fed’s efforts have cooled inflation’s rise.  

However, InvestorPlace notes: “WisdomTree Investments forecasts ongoing high inflation, with a 3.1% rate at the start of 2024 and 2.6% by Q3.” 

If so, says, “That sustained inflation trend may drive increased demand for gold…” 

So, let’s call the potential risk of sticky inflation “Bonus Catalyst #7.” 

Bottom Line: Gold’s Forecast Remains Bullish 

With at least 6 major catalysts for gold happening at once, most mainstream analysts forecast gold price gains in 2024.  

On the low side, ING analysts forecast record highs with a fourth-quarter average of $2,100. And InvestorPlace says, “Gold has upside potential to $2,300/ounce in 2024.” 

On the high side, currency expert and former advisor to the White House Jim Rickards says, “Gold could reach $5,000 per ounce…” 

Nobody is certain what will happen. But at this point, economic and geopolitical trends show little signs of reversing course. 

This means financial uncertainty may continue to grow in the coming months… 

And anyone looking for shelter from the possible economic storm ahead may find a more confident path forward with gold on their side. 

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