Mon, July 22, 2024

Gold’s 2024 Surge: 13.5% YTD Increase to $2,400/Oz

Еженедельник драгоценных металлов: Золото падает на $37,50, серебро - на $0,849

Quick Look:

  • Gold (XAU) reached a record high in May 2024, with current prices at $2,400/oz.
  • Inflation concerns and global economic uncertainty drive increased XAU investment.
  • The Fed’s rate cut projections and support levels between $2,295-$2,305 influence XAU prices.

Gold prices reached a record high in late May 2024, but the current price stands at $2,400 per ounce. This the price remains below the peak. However, year-to-date (YTD) data shows a 13.5% increase in gold prices. According to the World Gold Council, this upward trend underscores the growing demand and perceived value of XAU in today’s economic climate.

Several key factors are driving the current gold market. Investor concerns about inflation and the overall direction of the global economy are primary influences. These concerns lead to increased investment in XAU as a hedge against economic uncertainty and currency devaluation.

Inflation Fears Drive Gold Prices Up in 2024

Experts suggest that gold’s current nominal dollar price is near its historical highs. However, when adjusted for inflation, the price is significantly lower than its 1980 peak. Dr. Roger D. Silk, the founder and CEO of Sterling Foundation Management, highlights that gold’s real value is far from its historical maximum. He also points out that portfolios with stocks and bonds can benefit from allocating up to 10% to XAU. This allocation offers diversification, potentially enhancing the portfolio’s expected return without increasing risk.

Several market events have influenced recent gold price movements. The Federal Reserve’s projection for a single rate cut in 2024 is seen as bearish for XAU. Additionally, gold prices have been testing support levels in the $2,295 – $2,305 range, with potential support expected around $2,190 – $2,200. These technical levels are crucial for traders and investors to monitor.

$2,310.89/Oz: Gold’s Response to Inflation Data

On Thursday, gold prices showed resilience in response to U.S. producer inflation data. Prices initially trimmed losses, reflecting hopes for future rate cuts. Spot XAU was priced at $2,310.89 per ounce at 1510 GMT, with its lowest intraday price being $2,303.84. Meanwhile, U.S. gold futures saw a 1.2% decrease, settling at $2,326.90.

Before the release of the PPI data, market bets indicated a 40 basis point expectation for Fed policy easing. Following the data release, this expectation increased to 50 basis points. The market now anticipates two quarter-percentage rate cuts by the end of the year, highlighting the significant influence of economic data on gold market expectations.

A complex interplay of inflation fears, economic uncertainties, and central bank policies shapes gold’s performance in 2024. While prices have surged YTD, the market remains volatile, with various support levels and investor sentiments influencing the trajectory. As experts suggest, incorporating XAU into investment portfolios can provide diversification benefits and potentially enhance returns, making it a valuable asset in the current financial landscape.

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