In one of the most dramatic rallies of all time. Gold prices rose almost $260 an ounce over the span of just 11 weeks late last year. That amounts to a 14% appreciation rate over that period, which annualized comes to almost 70%. I'll bet you haven't heard those numbers before because gold doesn't get the financial news coverage it deserves.
Today, I'm going to tell you the story of the forces that drove that extraordinary rally. It's an important story because I believe these forces will continue to drive gold prices for the foreseeable future. We'll start on September 20th, a day federal Reserve Chair Jerome Powell poured cold water on market speculation that the Fed was finished raising interest rates.
He suggested the Fed's fight against inflation wasn't done yet. Gold took an immediate hit $100 an ounce following Powell's remarks that day. Then, on October 7th, Hamas attacked Israel. Over the next three weeks, gold reversed course and surged $173 an ounce until the situation in Israel seemed to stabilize and two weeks of profit taking set in the rally resume on November 10th, when the U.S. Bureau of Labor Statistics reported CPI numbers showing no increase in inflation in October.
Markets viewed this as the first sign that the inflation dragon had been slain. And on this good news, gold surged again, rising to $132 over the next three weeks and setting a new all time high. The tug of war between market expectations and economic reality continue. In early December, the Fed renewed signals that expectations for the timing and aggressiveness of rate cuts had become too optimistic once again.
And gold fell $900 over the next ten days. But by midday December, new economic data reinforced market sentiment that inflation had been tamed and optimism returned. Analysts concluded that the Fed would start cutting rates no later than March and make as many as six or seven cuts in 2024. Those expectations set prices to another all time, closing high of $2,078 on December 7th.
Gold fell from that high but stabilized above $2,000. Once again, Fed Chair Powell dampened expectations that rate cuts would come as early as March and that the Fed would cut rates more than three times in 2024. Then last week, another set of monthly CPI numbers was released. Those numbers suggested that inflation remained higher than markets had hoped and gold immediately sank below $2,000, breaking the longest string of days.
The metal had remained above that threshold. But that didn't last long. Within 48 hours, gold had rebounded above $2,000. So to summarize, over the past five months, the story of gold prices has been written by, one, inflation and interest rate expectations, and two, war. The net effect of all these price movements so far has been a strong rally of about $190 an ounce.
I believe this story will be much the same in 2024. Interest rate expectations. More fears will drive prices once again. But this year, a third factor will enter the equation. The US elections and the possibility that the next presidential inauguration will be fiercely contested up to, and perhaps, beyond Inauguration Day 2025.
I expect price surges to accompany multiple interest rate cuts, at least three of them this year. War in the Middle East and Europe is intensifying, which seems certain to boost gold and war fears may spread to Asia as well. Fanned by Chinese aggression in the South and East China Seas and by continuing threats from North Korea. Finally, anxiety about our politics is likely to drive safe havens and gold demand in the U.S. and around the globe, especially toward the end of the year.
While these three forces: falling interest rates, rising war fears, and U.S. political chaos will be the headliners in 2024. Two other long standing factors will continue to play supporting roles for gold central bank gold buying, which we've discussed at length elsewhere, and retail demand in Asia, which hasn't received the attention it deserves. The subject of the Asian gold market is too big to address here, but here's a practice we should learn from Asian buyers: buy on price weakness.
Here in the U.S., we tend to buy on strength when prices are rising in Asia. Buyers more often act when prices are falling, especially when they're falling during rallies. That's exactly where we are today. Prices are down above $70 in the midst of a strong rally. Interest rate cuts are clearly visible on the horizon. Geopolitical tensions are high and rough air lies ahead in U.S. politics. With all these forces aligned to move gold, this rally has a long way to go.
