Gold price set for record high in second half of year
Gold prices (GC=F) are expected to surge in the second half of the year, surpassing the previous record high of $2,480.25 (£1,918.31), according to analysts.
The three primary factors influencing gold prices in the second half of 2024 are cited as US Federal Reserve interest rates, geopolitical risk, and central bank purchases.
“Gold continues to shine on growing speculation around lower US interest rates this year. Recent dovish comments by Fed officials, complemented with a broadly weaker dollar and subdued Treasury yields have sweetened appetite for the precious metal,” said FXTM senior research analyst Lukman Otunuga.
The London Bullion Market Association (LBMA) said many analysts had expressed surprise by the strength of gold through the first half of the year.
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According to its latest review, all but one analyst expect the gold price to exceed the record high of $2,480.25 achieved on July 17, 2024 during the second half of the year. The average forecast suggests gold could reach $2,547.
Gold prices edged up this Wednesday, albeit modestly, with gains limited by the US dollar strengthening against other major currencies. Ricardo Evangelista, senior analyst at ActivTrades, said:
“Bullion prices are hovering above the $2,400 level, as the background narrative for traders remains positive due to the recent slowdown in US economic activity and lowering inflation, which has increased the likelihood of a Fed rate cut in September.”
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“Nevertheless, gold price gains are capped by uncertainty over the outcome of the US presidential election.”
"Many see Donald Trump as the favourite to win, meaning a more protectionist administration in Washington.”
"This scenario entails a stronger dollar, as more expensive imports could increase inflation and drive higher interest rates, creating headwinds for the precious metal's price.”
However, analysts unanimously predict a decline in the gold price as the year concludes. The average forecast for the year-end price is $2,395, approximately 6% below the anticipated average peak.
The original full-year average price forecast, published in early February, was $2,059 — 7.1% below the actual average for the first six months of the year ($2,205) and 12.5% below the newly predicted full-year average.
According to the World Gold Council, bullion prices strengthened in the second week of July, surpassing $2,400/oz which was driven by increased expectations of a shift in monetary policy by the US Federal Reserve that has led to a decline in the US dollar and bond yields.
Gold has appreciated by 16% this year, making it one of the best-performing assets globally. However, the high prices in 2024 had led to subdued demand in the Indian market, the world’s second largest consumer of gold.
"The surge in (gold) price has stifled the physical markets in south and southeast Asia, with buying evaporating and some selling coming back. This is not unusual and the buyers will return once they have acclimatised to the new range," said StoneX analyst Rhona O'Connell in a note.
Key Gold Price Metrics for 2024 according to LBMA:
Starting Price (2 Jan): $2,074.90
Mid-Year Price (28 Jun): $2,330.90
Record High (17 Jul): $2,480.25 (PM)
Year Low (14 Feb): $1,985.10
H1 Average: $2,205.25
Analysts' Forecasts (as of 1 Feb 2024):
Highest Prediction: $2,405
Lowest Prediction: $1,781
Predicted Full-Year Average: $2,059
Revised Analysts' Forecasts (as of 16 Jul 2024):
Highest Prediction: $2,650
Lowest Prediction: $1,985
Year-End Highest Prediction: $2,600
Year-End Lowest Prediction: $2,160
Revised Full-Year Average Prediction: $2,317
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