Economists at TD (TSX:TD) Securities think gold could surge as high as $2,100 in the coming months amid a potential dovish pivot by the Federal Reserve.
Over the past week, gold prices have increased significantly amid the ongoing conflict in the Middle East and growing convictions that the Federal Reserve reached the end of its rate-hiking campaign. Analysts believe the precious metal is only at the beginning of its rally and predict it could hit $2,100 in 2024 amid a possible dovish pivot by the Fed.
Analysts Think Gold May Hit $2,000+ in 2024
Gold prices have risen recently, climbing over 2% over the past week to $1,973. The upturn was partly driven by the persisting conflicts in the Middle East, as geopolitical risks typically increase the appeal of safe-haven assets.
However, according to market experts, this may not be the end of gold’s price gains.
Notably, economists at TD Securities noted that gold witnessed a respectable performance in the face of the Federal Reserve’s restrictive policy this year. Now, the US central bank is expected to adopt a more dovish stance, which could lift the bullion to as high as $2,100. The projection estimates that gold may hit that threshold in late 2023 or early 2024.
“We believe that the combination of an expected Fed dovish pivot by Gold traders in late 2023/early 2024 and strong official sector buying should lift prices to $2,100+ on a sustained basis in 2024.”
– TD Securities economists wrote.
Positive Outlook for Gold Prices in 2024
The key factors behind bullish predictions for gold relate to expectations of a more favorable environment for the precious metals in Q1 2024.
Primarily, the demand for bullion is on the rise amid deteriorating geopolitical headwinds, most notably the recent Gaza bombings and prospects of a wider war in the Middle East that could involve Iran, Lebanon, and the US, among other countries.
Secondly, the Federal Reserve likely reached the end of its interest rate-hiking cycle amid easing inflation rates and Treasury yields. As a result, this could pave the way for the Fed to take a more dovish approach and begin cutting rates.
But at the same time, many economists still expect a recession for the US economy. In that case, gold’s appeal would increase, encouraging some analysts to call for a target of as high as $2,500 by the end of 2024.
Precious metals, most notably gold, tend to perform well in periods of economic turmoil such as recessions or stagflation because they are a reliable store of value. The bullion hit an all-time intraday high of $2,072.5 in August 2020 at the peak of the coronavirus pandemic, a period of unprecedented pressure on global economies.
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