Why is Gold So Expensive Right Now – And How High Could it Go?

Why is gold so expensive right now – and how high could it go? Skittish investors, rumors of Federal Reserve rate cuts, and lingering geopolitical tensions are behind gold’s recent bull run. It’s too soon to tell whether these high gold prices will hold; much of the metal’s value potential hinges on the Fed lowering interest rates sometime this year. 

Gold continues to soar despite lukewarm comments from Fed Chair Jerome Powell concerning interest rate cuts in 2024. Investors may recall gold’s brief drop below the $2,000 support line in February after sticky inflation numbers tapered the prospect of early interest rate reductions. 

Sentiment seems to have changed since then – in a big way. Bulls won the day last week, with gold crashing through several new all-time-highs and settling in at a comfortable $2,178.80 on March 8. The precious metal held steady this morning, trading at $2,177.55 per troy oz. 

Are high gold prices here to stay, or is the market due for a correction? We’re covering the latest in gold’s surprising March 2024 bull run in this Bullion Academy news break. 

Why is Gold So Expensive Right Now? 

After a volatile February in the wake of stubborn inflation news and uncertain interest rates prospects from the Fed, gold finally hit a stride in early March. The first sign of a good month for the yellow metal market came on March 1, when gold jumped from $2,044.33 to $2,082.55. From that moment on, gold just kept climbing.

On March 6, gold hit a brand new all time high, ending the day at $2,147.57. By day’s end Friday, the metal capped off one of its best weeks in years at yet another ATH, $2,178.80/oz. 

Signs of the Times: Explaining Gold’s Latest Bull Run

As a non-correlated asset, gold’s key indicators are notoriously difficult to pin down. The precious metal is typically negatively correlated with signs of economic growth in the traditional economy. 

A combination of speculation concerning Federal Reserve interest rate cuts and a slew of geopolitical factors are likely behind gold’s recent bull run. The latter has been brewing for quite some time; rising oil prices, the looming threat of a trade war with China, and the ongoing Russia-Ukrainian conflict have all played roles in gold’s growing appeal to investors in 2023 and early 2024. 

Fed Interest Rate Speculation

The Federal Reserve’s interest rate adjustments are a decent predictor of gold’s price movements. Broadly speaking, gold’s price tends to go up when interest rates decrease. Jerome Powell renewed speculation that rate cuts are due in 2024 last Wednesday, helping to drive a gold bull run. 

Powell’s comments weren’t particularly assuring. The Fed Chair clarified that interest rate reductions are likely to happen “at some point this year -” but only if U.S. economic signals remain optimistic. 

Derivatives market-maker CME Group offers more evidence for gold bulls anticipating a strong year for the metal. The company’s FedWatch prediction model anticipates a 71.8% chance of reduced interest rates in the Fed’s June 12 meeting. 

If bullish gold stackers are right, the metal’s current high might be only the beginning. Rate cuts in June following six months of speculation should be enough to keep gold pushing forward to new heights. 

Geopolitical Factors Behind Gold’s New High 

Compounding gold’s recent successes is a complex set of geopolitical influencers. Gold tends to perform well during political and economic conflict – and 2024 is shaping up to be a tumultuous year on both fronts. 

Two major military conflicts in particular might be driving gold’s price run: the Israeli war against Hamas and the sustained Russian invasion of Ukraine. As these wars continue, experts anticipate a wide range of economic impacts. For non-correlated investments like gold and silver, a sustained price run could be in the cards as investors search for safe haven assets to store their wealth. 

Inside the United States, a sustained inflation problem is also good news for gold stackers. Historically, gold’s value tends to increase as inflation climbs. 

Gold is Expensive – But How High Could it Go? 

Gold’s future price action in 2024 depends primarily on whether or not the Fed follows through with its plans to cut interest rates. If interest rate cuts really are in the cards for 2024, gold could reach new heights as investors jump ship on traditional stocks and bonds to put their money into the world’s most popular safe haven asset. 

Geopolitical turmoil will also play a major role in the precious metal’s 2024 outlook. Conflicts in both Ukraine and Gaza are currently isolated, but international intervention could elevate either war into a bigger concern for global markets. This development would likely increase the appeal of gold, which is a classic safe haven asset during times of crisis. 

Gold bulls, like the Fed, should be on the lookout for favorable March inflation data, which could lead to the much anticipated interest rate reductions promised at the beginning of the year. 

For now, gold continues to ride the wave of a new all-time-high.