2024 is a historic year for gold. On January 1, 2024, the world gold price was at $2,063.73/ounce. On November 5, the gold price climbed to $2,749.92/ounce, just a few dollars below the recent record high.
According to CBS News, events that could impact gold prices are the 2024 US presidential election and the upcoming decision by the US Federal Reserve (Fed) on interest rates.
Analysts widely expect a second rate cut of the year at the Fed's November 6-7 meeting, and historically, changes in the Fed's interest rate policy have had mixed effects on gold.
While potential investors may hope that gold prices will temporarily decline following this week's Fed rate decision, such a trend is unlikely, according to CBS News analyst Angelica Leicht. After all, gold and interest rates have historically had an inverse relationship, with lower rates typically being accompanied by higher gold prices.
So, with the Fed expected to cut interest rates this week, many investors are predicting gold prices will rise rather than fall, or that the rate cut may not have a significant impact on gold prices in the short term.
Gold’s price trajectory is also shaped by factors beyond interest rates, including the strength of the US dollar, global economic conditions and inflation expectations. While the Fed’s upcoming rate hike may not immediately send gold prices higher, many analysts expect prices to continue rising, reaching 3,000 USD an ounce before the end of the year.
Several factors are behind these bullish forecasts, including strong central bank demand. In recent years, central banks around the world have significantly increased their gold reserves, changing the traditional relationship between interest rates and gold prices. This trend could help gold prices continue to rise.
Investor demand is another factor contributing to the rise in gold, with many people buying gold to benefit from the price increase. This sustained interest could support further price increases.
And with ongoing global conflicts and growing concerns about US debt, many investors and retailers are turning to gold to diversify their holdings. This demand could push gold prices higher over time.
In another development, the 2024 US presidential election on November 5 between Democratic candidate Kamala Harris and Republican opponent Donald Trump is predicted to be extremely exciting, with the two candidates closely chasing each other in the race to the White House.
"If Trump wins, I think gold will continue to rise. We'll probably be a little more worried about inflation with all the tariffs he's talking about," said Bart Melek, head of commodity strategy at TD Securities, Reuters reported.
"I expect the US election results to be the driving force for gold this week. In my view, the Fed rate cut is unlikely to cause much volatility, as the bank is likely to signal further cuts in line with market expectations," said UBS analyst Giovanni Staunovo.
"Gold will go higher regardless of who gets into the White House because both candidates want to not only maintain spending but actually increase spending," said Marex analyst Edward Meir.
