As the United States slows the pace of rate hikes and eventually stops increasing them, analysts predict that gold prices will rise towards record highs above $2,000 an ounce this year, albeit with some turbulence.
As inflationary pressures have subsided and markets anticipate a less aggressive monetary policy from the U.S. Federal Reserve, spot prices for the precious metal have soared above $1,900 an ounce, rising by about 18% since early November.
Last year, gold prices were severely impacted by rapidly rising interest rates, falling as low as $1,613.60 in September from a high of $2,069.89 in March, just short of a record peak in 2020. Higher interest rates increased bond yields, decreasing financial investors’ desire for non-yielding gold and driving the dollar to its strongest level ever.
With less pressure from the dollar and bonds, investors are likely to buy bullion as a hedge against inflation and economic turbulence, said WisdomTree analyst Nitesh Shah, adding that prices could easily move above $2,100 an ounce by year-end. Gold is traditionally seen as a safe place to store wealth. “