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What will happen to the price of gold this year? Experts weigh in

Thanks to global and political uncertainty, among other factors, the price of gold could rise in 2024. Getty Images/iStockphoto

For centuries, people have continued to hold gold for trade, wealth preservation and a multitude of other reasons. More recently, gold investing is reemerging as a popular investment and even the popular retailer Costco now offers gold online.

That's not a surprise for many gold experts, who've long espoused gold's ability to hedge against inflation. Investors often turn to gold to protect their money against economic tension and global unrest.

While gold's popularity is surging, investors should be prepared for price fluctuations, especially in the short term. 

For example, gold prices fell to $1,828 per ounce on October 4 but climbed to over $2,000 per ounce in late November. The price continued to rise before hitting an all-time high of $2,135 in December. More recently, however, the price of gold dropped to a one-month low of $2,012 on January 17. While gold prices are historically strong in January, prices may have fluctuated amid strong GDP numbers and a hot stock market.

The recent surge and subsequent fluctuations in gold prices beg the question: What will happen to the price of gold this year? We consulted several gold experts to get their take.

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What will happen to the price of gold in 2024?

Here are three gold price scenarios experts are monitoring this year.

Bullish outlook for gold prices in 2024

Some notable financial institutions and experts are long on gold in 2024, starting with J.P. Morgan's projection of increasing gold prices in 2024, leading to a record-high $2,300 per ounce price in 2025. The financial services giant points to anticipated interest rate cuts by the Fed, geopolitical uncertainty and a weaker dollar value as key drivers behind the price jump.

Sean Casterline, the president and senior portfolio manager for Delta Capital Management, also foresees strong gold performance for similar reasons. "We expect gold to move higher and be one of the market-leading sectors for 2024," says Casterline.

Casterline notes that the U.S. dollar is one of the largest drivers behind the price of gold. "There's generally an inverse relationship between the value of the dollar and gold prices. When the dollar weakens, gold prices tend to rise, as gold becomes more affordable for investors holding other currencies. We believe the Fed will ultimately lower rates by 175 basis points in the next 18 months. With lower rates comes a weaker U.S. dollar. This could be the catalyst for higher gold prices."

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Gold prices could remain relatively flat

As with any investment, it's impossible to predict what will happen with gold prices, given the numerous variables and factors that can change at any moment. For example, in 2019 who could've predicted the challenges that would come with the pandemic the following year?

"A fool's errand is predicting markets, even more so with gold," says Matt Willer, a managing director and partner at Phoenix Capital Group. "However, I expect a flat year with a tilt to the downside."

Since gold is a hedge against inflation, many investors turn to gold when inflation rises. But, as Willer points out, inflation is declining. "There may be fewer people going long on commodities like gold as inflation further settles and stabilizes."

Willer notes that current geopolitical and economic factors are likely to be viewed as under control and unlikely to lead to a return to significant inflation. "All things considered, I expect a relatively flat year with increased volatility as we approach the election. I expect a push and pull with international tension and uncertainty promoting bullish sentiments, offset by those who want to re-deploy capital into an asset class that may have more appreciation and upside given the current inflation levels. All said, flat year with a slight nod to the downside."

Gold prices are unlikely to peak or bottom out

Many investors look to gold for stability when the economy and global political scene appear uncertain or volatile. That uncertainty could play a significant role in the price of gold this year.

"While uncertainty is an ever-present state in economic and political affairs, 2024 seems to be stacking them up," says Peter C. Earle, a senior economist at the American Institute for Economic Research. "Economically, will the US slip into a recession, or will we see a rare—but not unprecedented—'soft landing'?" If we have a recession, will it be mild or severe enough that the Fed has to lower interest rates significantly? And if the Fed has to lower rates aggressively, will that interrupt and possibly reverse the ongoing disinflation? If we have a soft landing, will the US economy drift along or boom?"

Earle observes other uncertainties this year, ranging from a contentious election to wars in Ukraine and the Middle East. Additionally, stock market trends and increasing national debt could factor into the price of gold.

"To the extent that gold is a safe haven asset sought in periods of high and increasing uncertainty, 2024 certainly offers plenty of justifications for being long on gold, which is bullish for its price," Earle says.

While Earle notes the signs indicating strong gold performance, he doesn't predict the price of the yellow metal to peak or bottom out this year. "I don't expect a peak—the trader part of me is reluctant to pick highs and lows —but broad and increasing sources of instability in the world today are likely to lead to higher gold prices. The number of economic and political circumstances which would need to be resolved conclusively in order for gold prices to fall precipitously just doesn't seem realistic," says Earle.

The bottom line

Many experts anticipate a rise in gold prices this year, so buying gold now could lead to higher returns. Of course, gold isn't for everyone, so consider talking with your financial advisor to ensure any investment aligns with your overall plan.

Gold, like other forms of investment, isn't risk-free, so it's important to understand the pros and cons before proceeding. Many gold experts recommend limiting your gold and precious metal allocation to 10% or less. But if you anticipate gold prices rising, now may be a good time to secure a slice of this precious metal.

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