Will gold prices remain strong in 2024? Real-time gold price analysis and outlook for the second half of the year

Reasons Why Gold Prices Keep Rising

Gold has now become an essential investment option. This year, domestic gold prices have reached 635,000 won per 3.75 grams, a remarkable 43% increase from 443,000 won during the same period last year. International gold prices also show a steep upward trend, rising to approximately $3,337 per ounce, up 27% since the beginning of the year and 39% compared to one year ago.

What is driving this increase in gold prices? It goes beyond simply “the economy is unstable” and involves more specific structural changes.

The De-dollarization Phenomenon on the Global Stage

First, it is noteworthy that many countries are making efforts to reduce their dependence on the dollar in international trade. China is expanding yuan payments in trade with various countries to elevate the yuan’s international status, and India is actively promoting the use of the rupee. Countries under U.S. sanctions are also diversifying their assets into gold and other currencies instead of the dollar.

These changes increase the global demand for gold, which ultimately leads to higher gold prices. Paradoxically, as trust in the dollar wavers, the value of gold shines even brighter.

Three Variables Moving Gold Prices in 2024

1. Geopolitical Instability Boosts Gold Value

As international conflicts such as the U.S.-China trade dispute, the Russia-Ukraine war, and worsening Middle East tensions intensify, gold’s role as a “safe haven” becomes more prominent. Looking at the 2008 global financial crisis and the 2020 pandemic, investors flocked to gold whenever the economy shook, causing prices to surge.

It is important to note that the current global situation shows signs of structural instability beyond temporary tensions. This suggests that gold prices may continue to rise further in the remaining months of this year.

2. Weakness in Developed Economies

The U.S. is grappling with inflation issues, while Europe faces concerns over economic slowdown. Whenever signals of economic downturn emerge, investors tend to move their funds into safe assets like gold. The higher the economic uncertainty, the more attractive gold becomes as an investment.

3. Central Bank Interest Rate Cuts

When interest rates fall, yields on bank deposits and bonds also decrease. However, since gold does not pay interest, the opportunity cost of holding gold is relatively low. Moreover, rate cuts are signals of economic weakness, prompting investors to shift toward safer assets.

As seen in the case of the Federal Reserve’s significant rate cuts in September last year, which caused gold prices to soar, further rate reductions are likely to push gold prices even higher.

How Far Will Gold Prices Go in 2024?

Experts’ Divergent Outlooks

Major financial institutions have differing forecasts for gold prices at the end of 2024.

Bullish Outlook:

• JP Morgan expects prices to reach $3,675 per ounce. Given that current prices already exceed $3,300 and there is still time remaining in the year, this scenario is quite realistic.
• Goldman Sachs and Citigroup have set a target of $3,000 per ounce, which has already been achieved.

Bearish Outlook:

• Barclays and Macquarie predict that gold prices could fall to $2,500 by year-end. This represents about a 25% decline from current levels, which is considered a less likely scenario.

Realistic Scenario

Based on current trends, it is highly probable that gold prices will continue to rise beyond 2024. However, some experts mention the possibility of technical corrections in the second half of the year, which is worth noting.

The steady increase in gold prices until May, followed by a slight slowdown afterward, likely reflects these factors. Short-term volatility may occur.

How to Approach Gold Investment?

While the upward trend in gold prices is clear, investors should keep the following points in mind.

The upward trend is certain, but managing volatility is essential. A single geopolitical event or interest rate decision can significantly impact gold prices. Therefore, it is important to have a plan for profit-taking and stop-loss.

Don’t forget diversification. Even though gold is a safe asset, focusing solely on gold is not wise. Balancing investments with cryptocurrencies, bonds, and other assets is prudent.

Maintain a long-term perspective but stay sensitive to short-term signals. The bullish trend in gold is structural, but technical adjustments during the year can present trading opportunities.

In conclusion, gold prices in 2024 are likely to maintain a bullish momentum, and as long as global uncertainties persist, gold’s appeal will not diminish.