Despite reaching all-time highs in Asian markets, gold prices finished the week down more than 3.3%. Factors such as the health of the global and US economies, demand from China and India, the attractiveness of Exchange Traded Funds, US bond yields, the value of the US dollar, and central bank buying are expected to impact gold prices in 2024. Central bank buying, in particular, is anticipated to remain robust and provide an extra boost to gold prices.

Gold, which closed at approximately $2,004 an ounce for the Comex front month and $2,020 for the continuous contract close, experienced significant fluctuations throughout the week. It reached an all-time high of $2,130 an ounce on Monday, touching $2,150 an ounce. However, despite these highs, gold prices ultimately faced a decline of more than 3.3%. Nevertheless, gold is still up around 10% for the year.

According to John Reade, Chief Strategist at the World Gold Council (WGC), the increase in central bank purchases in 2022 was surprising. Reade expects above-average central bank buying to provide an additional boost to gold prices in 2024. Central bank demand contributed 10% or more to gold’s performance in 2023, indicating its significant impact on the market.

While a “soft landing” in the US economy, characterized by controlled inflation and no recession, historically hasn’t favoured gold, several factors could support gold prices. Geopolitical tensions, as well as continued central bank buying, may serve as catalysts for gold’s performance. Uncertainties surrounding the US economy, including the upcoming November Consumer Price Index data and the Federal Reserve’s last meeting of 2023, which will reveal interest rate expectations for the coming year, further contribute to the unpredictability of gold prices.

Looking ahead to 2024, major elections globally in the US, EU, India, and Taiwan may lead investors to seek portfolio hedges, with gold being among the preferred options. The World Gold Council (WGC) suggests that gold is likely to be one of the favoured choices for effective hedges in investor portfolios in the coming year.

In conclusion, despite a dip in gold prices of over 3.3% for the week, reaching all-time highs in Asian markets, and considering various factors such as the health of the global and US economies, demand from China and India, the attractiveness of Exchange Traded Funds, US bond yields, the value of the US dollar, and central bank buying, gold prices are expected to receive a boost from robust central bank purchases in 2024. Uncertainties surrounding the US economy and major upcoming elections worldwide may further drive investors towards gold as a preferred hedge option.