Gold News

Gold Price Enters 2024 with 13.7% Annual Rise as Central Bank Buying Beats High Rates

The GOLD PRICE went into 2024 on Friday in London with a new year-end, quarter-end, month-end and weekend record high in terms of the US Dollar, rising 13.7% from the final trading day of last December.
Spiking to a new all-time gold spot market high of $2143 per Troy ounce on Monday 4 December, the price of gold bullion finally breached its global benchmark high of August 2020's Covid gold peak at this Wednesday afternoon's London Bullion Market Association auction, fixing at a price of $2069.
The 'safe haven' precious metal then rose to another new record of $2078 at Thursday afternoon's benchmark, before fixing $15 lower at this morning's auction – the final benchmarking event of 2023 – amid geopolitical news of Russia's heaviest-yet missile attack on towns and cities across Ukraine, Israel continuing its bombardment and invasion of Gaza in retaliation for Hamas' 7th October atrocities, and former US President Donald Trump being blocked by the State of Maine as well as Colorado from seeking re-election in 2024. 
Across the year, the London PM gold auction averaged $1940 per Troy ounce, rising 7.8% from 2022 and outstripping the consensus forecast made by analysts entering this year's LBMA competition back in January by just over $80 per Troy ounce.
Chart of the spot-market gold price in US Dollar terms, last 5 years. Source: BullionVault
"Although US interest rates [were] expected to stay above 5% for 2023," said the entry from Bruce Ikemizu of the Japan Bullion Market Association – this year's winning forecaster with an annual average prediction of $1950 – "gold already has some antibody to higher interest rates.
"Focus is more on the de-dollarisation from multi-polarisation of the world. More and more central banks will consider gold value over the fiat currencies."
Thanks to the heaviest central-bank buying since the early 1960s, the price of gold this year defied the steepest rise in real US rates of the modern era, adjusted for inflation.
While the Federal Reserve kept its key interest rate unchanged at a 2-decade high of 5.33% earlier this month, the US central bank flipped to predicting three rate cuts or more, down to 4.60%, across 2024.
Traders in interest-rate futures now expect 3 further rate cuts from there, betting on average that the Fed will end next year at 3.80% according to the CME derivatives exchange's FedWatch tool, with the first cut coming in March.
In contrast to gold, the price of silver ended 2023 dead-flat from the prior year in Dollar terms, fixing at midday Friday in London around $23.80 per Troy ounce, 15 cents below last December's finish.
Global stock markets slipped Friday but showed a rise of 22.0% for the year on the MSCI World Index, led by a rise of 24.3% in the US S&P500 index and a rise of 55.6% in the tech-stocks Nasdaq 100.
Government bond prices also slipped Friday, edging the yield offered to new buyers of 10-year US Treasury debt up to 3.88% per annum – like the Dollar silver price, unchanged from the end of 2022.
Although base metal copper made a 2.0% rise for the year, albeit 35 cents lower per pound from mid-January's 7-month peak, most industrial commodities fell across 2023, with Brent crude oil down 9.1% in Dollar terms – its first year-on-year loss since 2020 – despite Opec-Plus cartel leaders Saudi Arabia and Russia continuing to restrict output in a bid to offset weaker demand from world No.2 economy China.
With the Dollar falling sharply on the foreign exchange markets this year, gold's gains were smaller for non-US investors, adding 9.7% in Euro terms to finish at €1865 with the UK gold price in Pounds per ounce 7.7% higher across 2023 at £1622.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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