Frequent readers of “Gold News & Views” know that I’m an astute watcher of financial and geopolitical news. If there’s a chance that a story or factor may impact gold prices, I want to know about it before anyone else so we can get that information out to our clients as quickly as possible.
These final days of 2023 are no exception. I’ve been hard at work mining for data, infographics, and analysis on what the coming year may hold. Soon you’ll be able to explore this information in a new exclusive special report—but for now, here’s a sneak peek at some (but not all) of the biggest stories for gold owners in 2023 and what they might mean for 2024.
Geopolitical uncertainty was one of the largest drivers of gold prices in 2023.
From the ongoing war in Ukraine to the conflict in Gaza, North Korea’s flexing of its military capabilities, and China’s escalating tensions against the United States and Taiwan, 2023 was another year of the world holding its economic breath, waiting to see if any of these conflicts would plunge us into another global recession.
The uncertainty surrounding these conflicts contributed in a major way to gold prices in 2023, serving as the bedrock for gold’s launch to a new all-time intraday high price in early December.
Unless these conflicts resolve in the next week and a half, I expect that they will likely continue to support higher gold prices in 2024.
Federal Reserve policy contributed directly to gold reaching its new all-time intraday high price.
Look through all the financial headlines of 2023, and two of the most common words you’ll come across are “inflation” and “recession.” As with geopolitical uncertainty, this is likely a phenomenon that will continue into 2024.
While inflation saw a significant drop over the course of 2023, consumer prices remained high, and consumer debt skyrocketed to record highs. Then, in early December, the Federal Reserve suggested that its bout of interest rate hikes may be over, with multiple rate cuts possible in 2024. Since higher interest rates have been supporting a stronger dollar, news of potential rate cuts led to a drop in the dollar’s relative strength, simultaneously pushing gold to its current all-time intraday high.
Looking ahead, many analysts continue to predict a recession, with terms like “everything bubble” being used and one economist even predicting that we’ll soon experience the “biggest crash of our lifetime,” according to a December 22, 2023, article by Fox Business. You can be sure that folks who believe the writing is on the wall are looking for ways to protect their wealth—and gold may see its demand rise even higher.
Trust in our traditional banking system is wavering, while trust in gold is increasing.
In 2023, we experienced three of the five largest U.S. bank failures in history when Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank were forced to close their doors.
As Americans eye their own bank accounts, concern has turned to action, with reports that bank deposits in the U.S. have dropped by the most in 39 years. Where is that money going? In the wake of the banking failures, gold prices jumped—a sign that depositors looking for a safer way to store their wealth may have converted some of their paper cash into physical gold.
The shockwaves of the banking failures continue to be felt throughout the banking industry. As recently as December 22, 2023, an article by MarketWatch noted that banks are “increasingly tapping a Fed facility set up after SVB’s collapse.” The facility in question—the Bank Term Funding Program—is essentially a loan program for banks in need of liquidity.
As you can see, the biggest stories for gold in 2023 could very likely become the biggest stories for gold in 2024. If these factors and concerns persist, there’s no telling how high gold demand—and prices—may soar.