First - a quick recap on how gold performed in 2023
In 2023, the price of gold rose 15% to $2,078 per ounce, which is the highest annual close on record, according to the World Gold Council. This was driven by higher demand for gold from emerging markets and central banks, as well as geopolitical risks and higher interest rates.
So the big question is: will this positive trend continue? Or will 2024 be more of a mixed bag, like 2022, or even a ‘bad egg’ like 2021 or 2015?
Firstly, precious metals can be influenced by many geopolitical and economic factors. Even the most intrepid investment analysts can't give you an accurate prediction of what will happen in 2024.
But here’s what you will learn in this blog:
- Nicky’s key drivers for precious metals
- Gold price outlook 2024
- Silver price outlook 2024
- Platinum price outlook 2024
- Palladium price outlook 2024
What will influence precious metal prices in 2024?
Nicky has highlighted several key drivers that are likely to influence the price of gold and other precious metals in 2024:
- Driver #1 - Weaker global economic growth
- Driver #2 - Inflation not returning to targets
- Driver #3 - Fed and Central Bank decisions
- Driver #4 - Currency price movements
- Driver #5 - Geopolitical tensions escalate
Let’s break them down:
Driver #1 - Weaker global economic growth
- “The global economy will be weak in 2024 as the delayed effects of rate increases catch up with us, putting margins under pressure and causing cracks in the labour markets”
- “Global growth will be 0.5% weaker in 2024 vs 2023, mostly due to the US and China, well below its historical average (2000-19)”
The OECD* has predicted a mild slowdown in 2024, with 2.7% growth, although this is expected to recover slightly to 3.0% in 2025. However, Asia will account for most of this growth in 2024 and 2025.
During negative economic events, such as recessions and high inflation, the price of Gold can often go up as investors flock to lower-risk assets to protect their wealth.
*The OECD is the Organisation for Economic Co-Operation and Development, representing 38 high-income countries, most of which are in Europe and North America.
Driver #2 - Inflation not returning to targets
- “With the lagged effects of monetary policy, further growth weakness is likely”
- “The largest risk is if inflation does not return to targets, which will play out in even “higher for longer” rates and a much lower growth profile in the medium to long term”
Inflation in the OECD (for all items) reached a peak of 10.6% in September 2022 before falling to 5.4% by November 2023. This was influenced by a rapid increase in energy prices after the Russian invasion of Ukraine in February 2022, as well as supply chain problems and the economic impacts of the pandemic and lockdowns.
As we mentioned earlier, an increase in inflation is often correlated with an increase in the price of gold. However, although gold did reach a record high in 2023 (in nominal terms - so not adjusting for inflation!), in 2022, at the peak of the inflation crisis, the price actually fell slightly by 0.3%.
Driver #3 - Fed and Central Bank decisions
- “Surgical Fed cuts, to boost growth, will likely occur sooner (first half of 2024, possibly Q1 2024)”
- “The Fed must maintain independence but at the same time earlier rate cuts provide enough time lag for easing to boost the real economy into US elections”
In 2022 and 2023, the Fed increased interest rates 11 times from 0.25% to 5.5% in July 2023 - the highest in over two decades - in a bid to tackle high inflation.
Some investors believe that Fed hikes negatively impact the price of gold. However, the relationship is unclear, and long-term data suggest there is no correlation between rates and gold.
Driver #4 - Currency price movements
- “US interest rates will decline at a faster clip than in other DM countries.”
- “US exceptionalism” should corrode as US data sours and the country enters a contentious election cycle”
- “Thus the potential FX outperformers in 2024 should be currencies most hurt by the $’s positive carry in 2023”
In 2022, the $ hit parity (a 1:1 ratio) with the € for the first time since 2002, signalling a weaker Euro. As the price of gold is denominated in $, that made gold generally more expensive for investors in the Eurozone. By 2023, the € improved slightly, occasionally reaching a rate of €1 to $1.10 and above.
However, back in January 2014, €1 was worth about $1.35. This meant, in theory, an investor with €1,000 to spend could purchase $1,350 worth of gold, instead of about $1,110 worth of gold in January 2024 (disregarding fees).
Driver #5 - Geopolitical tensions escalate
- “Deglobalisation is continuing at a fast rate given two ongoing wars (Russia/Ukraine, Israel/Hamas) compounded by one-sided Western-driven policy making”
- “War risk increases sanction risk which will drive ongoing de-dollarisation and continue to upend commodities markets”
- “40 countries (representing 42% of global GDP) have national elections in 2024 creating political/policy risks”
Despite increasing geopolitical tensions, gold was one of the best-performing assets in 2023, with prices rising by 15%. However, the situation in the Middle East is much more unstable than it was this time last year, so investors will be eager to monitor the impact of this on gold’s performance in 2024.
Here's a summary of Nicky’s key drivers of precious metals prices in 2024:
- Global economic slowdown
- Inflation not falling fast enough
- Fed and Central Bank decisions
- FX rates
- Geopolitical uncertainty
These are macroeconomic factors that have far-reaching impacts on everything from gold to stocks, bonds, energy bills and the cost of living. It's worth paying attention to them if you're planning on investing in gold in 2024.
Nicky has also identified other macro uncertainties to monitor in 2024, which include:
- Policy failures, such as Central Bank policy mistakes or government policy failures A China slowdown or faster-than-expected growth here
- More debt crises
- US Election risks, such as a Biden withdrawal
- Supply chain risks due to de-globalisation
- Official currency interventions
- Protests and social upheaval in response to the ongoing cost-of-living crisis
- Cyber or AI threats as technology advances
- Asset bubbles bursting
- An extreme weather event
What is the precious metals price forecast for 2024?
The price of gold had its ups and downs in 2023, although it was not as turbulent as 2022, when prices fluctuated like a yo-yo, even though the price at the end of December 2022 was almost the same as it was at the start of the year.
“2023 was just as challenging as 2022 - two wars, messy disinflation, ongoing deglobalisation, a shock US regional banking crisis at a time when two consensus views (China’s reopening and a US recession) did not come close to playing out.”
What are the predictions for gold and other precious metals in 2024?
Will 2024 continue where 2023 left us, or will there be a few surprises? Let's find out what Nicky is predicting for the price of gold, silver, platinum and palladium.
The gold price outlook in 2024
Base case:
Average: $2,050/oz
Low: $1,900/oz
High: $2,200/oz
Probability: 50%
The Bullish* case: ~ $2,500/oz. Nicky predicts the probability of this scenario is 30%
The Bearish* case: ~ $1,600/oz. The probability of this scenario is 20%
(*bullish means investors expect prices to go up, bearish means they expect prices to go down)
Nicky's ingredients for a bullish case scenario for the price of gold in 2024:
- Sustained lower global growth and/or a much faster fall in inflation to drive aggressive Fed cuts earlier
- Reevaluating 60/40 portfolio allocations to renew strategic investment into the metals space
- A policy mistake that dampens confidence in the global monetary system and structurally weakens the US dollar
- Physical demand is stronger than expected among Central Banks or Asia
- New geopolitical risks (US Election, fiscal crisis in the developing world) that destabilise the global economy
Nicky's ingredients for a bearish case scenario for the price of gold in 2024:
- Inflation doesn't fall as quickly as hoped, delaying Fed rate cuts
- Physical demand in Asia is lower than expected
- The US or China have a recession (known as a ‘hard landing’)
- Central Banks monetise and sell their recent gold purchases if it's no longer seen as a safe hedge against geopolitical risks or inflation (or it faces further sanctions and policy risks)
- A liquidity crunch (lack of cash) in the US dollar forces more deleveraging of gold
Nicky’s verdict on the price of gold in 2024:
Despite these risks, Nicky is upbeat about gold.
Gold will “print another new record” in 2024 thanks to Fed cuts occurring “sooner rather than later”. The effects of a peaked dollar, slower global growth, deglobalisation, messy geopolitics, unsustainable global debt and a “very under owned investor community” will ensure gold returns as a “safe diversifier even at these higher prices”.
👉 Click here to check the current price of gold and set up instant market alerts.
The silver price outlook in 2024
Base case:
Average: $25/oz
Low: $21.50/oz
High: $30/oz
Probability: 50%
The Bullish case: ~ $35/oz. Nicky predicts the probability of this scenario is 35%
The Bearish case: ~ $18/oz. The probability of this scenario is 15%
Nicky's ingredients for a bullish case scenario for the price of silver in 2024:
- Gold outperforms, which will depend on the geopolitical situation, Fed policies and other catalysts such as sovereign debt
- There's more industrial demand for silver and strong growth in emerging technologies and/or more use in renewables
- China rebounds strongly, resulting in more demand for all commodities, including silver
- There is prolonged physical tightness (low available cash and higher transaction costs) and stockpiling
Nicky's ingredients for a bearish case scenario for the price of silver in 2024:
- The Fed keeps rates high for longer due to higher-than-expected inflation, which results in more deleveraging in precious metals
- China, the US or Europe have a recession, which would soften demand for all industrials, including silver
- Liquidations (businesses closing) if price expectations turn over (are worse than expected)
Nicky’s verdict on price of silver in 2024:
Silver will rise in value alongside gold because it's cheaper compared to past price peaks, more flexible to a weaker $, has fewer available stocks, and deficits are expected “throughout this decade” (which tends to boost demand and prices).
👉 Click here to check the current price of silver and set up instant market alerts.
Platinum price outlook in 2024
Base case:
Average: $1,050/oz
Low: $800/oz
High: $1,200/oz
Probability: 50%
The upside risk (another way to describe ‘bullish’): ~ $1,400/oz (25% probability)
The downside risk (another way to describe ‘bearish’): ~ $700/oz (25% probability)
The upside risk for platinum depends on:
- Supply disruptions and/or production cuts that are worse than expected
- Sustained gold outperformance (gold becomes more expensive, whereas platinum is a cheaper proxy which could attract investment)
- China and/or Europe grow more than expected
- Countries ramp-up green hydrogen/electrolyser production
The downside risk for platinum depends on:
- A recession (hard landing) in China, the US or Europe
- Interest rates remaining high for longer
- South Africa and Russia persistently destock WIP material (inventory that hasn't been fully manufactured but is no longer classified as raw materials inventory)
Nicky’s verdict on the price of platinum in 2024:
Nicky says palladium is expected to surpass platinum, thanks to demand from the automotive and industrial sectors. A soft-landing (avoiding a recession) should “marginally crimp” demand but this would be compensated by higher investment demand. Closures of major American mines will also support platinum prices (with less supply, prices tend to go up).
👉 Click here to check the current price of platinum and set up instant market alerts.
Palladium price outlook in 2024
Base case:
Low: $800/oz
Average: $1,000/oz
High: $1,350/oz
Probability: 50%
The upside risk: ~ $1,500/oz (25% probability)
The downside risk: ~ $500/oz (25% probability)
The upside risk for palladium depends on:
- Supply chain disruption
- China growing better than expected
- BEV (battery electric vehicle) take-up slows, especially if it's in China
- More investors short-covering (buying back stock they've borrowed and returning it to the lender) and/or re-engaging (taking an interest in palladium as an investment option)
The downside risk for palladium depends on:
- Russian commodities ramp up or destocking of Russian/South Africa inventories
- Recession in China, the US or Europe
- Higher interest rates for longer.
- BEV take-up accelerates in US (especially) and Europe
- Autocat (automotive catalyst) recycling starts in China
👉 Click here to check the current price of palladium and set up instant market alerts.
Nicky’s verdict on the price of palladium in 2024:
Nicky says supply risks will lead to a fall in the price of palladium in 2024, which will continue to be susceptible to volatility. 'The outlook should remain fragile and unconvincing into a soft-landing (avoiding a recession) backdrop'. However, if demand increases, even incrementally, this will create 'tactical bullish opportunities' for palladium.
In a nutshell: 2024 could be a good year for gold and silver
If you’re planning on buying these two precious metals, now might be a good time. However, remember that the price of gold, silver and other precious metals can be very unpredictable, so there are no guarantees.
Nevertheless, it’s worth remembering that Nicky expects gold to reach a new record high in 2024, based on her prediction that the Fed will cut rates “sooner rather than later”. She also expects silver to rally (increase in value) with gold, thanks to more investor demand which could compensate for “mild contraction” in industrial demand. Other PGMs (the platinum Group Metals, which obviously include platinum but also palladium and a few others) could face pressure due to slower economic growth, although Nicky says platinum is expected to surpass palladium as investment demand grows.
After some volatile years - with a few surprises thrown in - it will be interesting to see how gold and other precious metals fare in 2024.
