These factors will determine the gold price until 2024
News Arnulf Hinkel, Financial Journalist – 24.10.2023
Of the numerous factors influencing the performance of gold, four have emerged since the advent of the Covid-19 pandemic that are dominating the development of the gold price: the interest rate policy of the central banks, the inflation rate, the economic development of a country, and geopolitical crises. The precious metal will continue to be exposed to these drivers during Q4 2023 and at least in the first quarter of 2024.
When can we expect an interest rate turnaround?
The easing inflation rates, first in North America and for some time now also in Europe, as well as the continuous increase in key interest rates in many countries have put gold under heavy pressure this year. The positive labour market data and overall economic data in the USA have also strengthened the dollar against other currencies, resulting in the yields on 10-year US bonds rising to almost 5 percent a few weeks ago – the highest level in 16 years. Interest rates on European government bonds increased more slowly, but at 3 percent, German Bunds, for example, reached a 10-year high. Most market experts, however, expect a turnaround in interest rates in the foreseeable future – either when the central bank inflation-fighting targets are reached or when the danger of an economic slowdown becomes too great. In any case, this would ease the pressure on gold.
Gold still in demand as a safe haven
Since 2020, the precious metal has been in intense demand as a safe haven by institutional and private investors alike in the face of numerous crises – Covid-19, the Russian invasion of Ukraine and, most recently, the shocking resurgence of the Middle East conflict. From 13 March 2020 to 20 October 2023, the price of a gram of gold rose from €44.0 to €60.52. Since Hamas' recent attack on Israel alone, the price of gold has risen by more than 8 percent. However, this sudden development will be put into perspective if – as is to be hoped – the current situation does not turn into a conflagration that spreads to numerous surrounding states.
