Some market analysts predict that the price of gold could rise to $3,000 by the end of the year after hitting its third record high so far in 2024. Geopolitical tensions, strong central bank buying and growing demand from China are driving up the price of the golden metal.

Following gold’s strong March, thanks to the fact that futures investors and US gold ETFs helped push prices to new all-time highs, April is shaping up to be even stronger and all indications are that the price will remain elevated throughout the year.

Furthermore, the price of an ounce of gold has broken new records this week. The maximum of 2,384.35 dollars (2,196.18 euros) reached this Tuesday leaves behind the record set on Monday, according to market data consulted by Europa Press, although it has contained its advance and has been losing strength throughout the day to 2,358.30 dollars (2,172.19 euros) at the closing time in Europe.

Geopolitical tensions, armed conflicts and tighter monetary policy sent gold prices soaring in 2023, and we have started this year with an unprecedented gold rush. Investors are turning to gold for its historical value as a safe-haven asset and as a hedge against economic instability.

Likewise, the sanctions imposed on Russia have boosted the demand for gold by some central banks, following the trend seen in recent years. According to IMF data, central banks’ global gold reserves increased by 39 tonnes in January. 

This represents more than double December’s net purchases and the eighth consecutive month of net purchases. This is the case of China’s central bank, which expanded its holdings in March for the 17th consecutive month. Moreover, central banks have purchased more than 1,000 net tonnes of gold for two consecutive years, according to the World Gold Council.

Will it reach $3,000 an ounce by the end of the year?

Gold’s meteoric rise could also be boosted by the US presidential election in November, which Donald Trump has a good chance of winning and which presents a very favourable backdrop for gold prices to reach $3,000 an ounce much sooner than expected.

On the other hand, the US Federal Reserve has indicated that there could be three interest rate cuts during 2024, which could push gold prices even higher. Investors were concerned that the Fed might make fewer than three rate cuts this year, as economic reports in recent months have shown that inflation remains high and the labour market strong.

There are growing signs that this is a special moment for the precious metal or, as the analysts at GSC Commodity Intelligence call it, “the beginning of a new historic super-cycle for gold”. Interestingly, real-time data obtained by GSC reveals a strong correlation between increased searches for “stock market bubble” and inflows of “gold capital”. This reinforces gold’s reputation as the best hedge for diversifying an investment portfolio.

Similarly, Aakash Doshi, head of commodities research at Citi, forecasts that the gold price could soar 50% to 3,000 per ounce in the next 12 to 18 months: “The most likely wildcard path to $3,000 per ounce gold is a rapid acceleration of an existing, but slow-moving trend: de-dollarisation in emerging market central banks, which in turn leads to a crisis of confidence in the US dollar”.

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