Gold performance: three scenarios for 2024

In addition to the strategies of central banks – both in terms of interest rate policy and gold purchases – the development of existing geopolitical crises and conflicts as well as significant events will have a direct influence on the gold price this year. Take, for instance, the US presidential elections: since 2000, gold has appreciated by an average of 3 per cent within the last three months before a congressional election. Another decisive factor in 2024 will be the development of the global economy. The World Gold Council has analysed three possible scenarios and their prospective impact on gold.

Economy: soft landing, hard landing – or no landing at all?

The Gold Outlook 2024 regards a “soft landing” as most likely, with a probability of 45 to 65 per cent. Alongside decreasing inflation rates and only a slight decline in economic growth, the global economy would get off relatively unscathed, which would lead to sideways movements in the gold price with only slight upward potential. In the event of a “hard landing” – i.e. a full-blown recession in many countries – gold would shine as a safe haven and possibly trade above its previous record levels. The World Gold Council estimates this scenario at a probability of 25 to 45 per cent.

The question is not whether but when the interest rate turnaround will come

The third is a “no landing” scenario, outlining a development in which inflation rates remain high in 2024, but without a recession, as in 2023. However, the Gold Outlook 2024 assigns only a 5 to 10 per cent probability of occurrence to this scenario, referencing Morgan Stanley analysts: “No landing is just a postponed soft or hard landing”. Recessionary tendencies are already emerging in the US economy, which, if fully realised, would not only lead to a rapid end to the Fed’s high interest rate policy, but also significantly weaken the dollar. Both developments, however, would have a positive impact on the gold price.