Rarely are the forces that will drive gold prices in the year ahead so clear as they are today. What are these forces? Inflation, war and our politics. Let's start with inflation. More than any other single factor, the Federal Reserve's battle against inflation drove gold prices last year.
Whether it was speculation, rumor or actual statements from Federal Reserve officials, the question of whether the fed would keep raising interest rates, stop raising them, or start cutting them ruled the market last year, and it will again in 2024. In fact, it already has. The current rally in gold received a mighty boost in November, when markets became convinced that the fed had slain the inflation dragon. In response, gold jumped more than $100 an ounce to an all time closing high of $2,072.
I've talked before about how gold is not just a bad news buy as many people think. This is a great example of how good news can boost gold prices too. Inflation is falling and gold soars to record highs. Since the first of the year, the fed has been tamping down expectations that it would begin cutting rates immediately. Nevertheless, gold has held most of its gains, remaining above $2,000 for more than 50 days running, the longest period above that milestone ever. So gold's gains are solid, but they're not finished. We can expect at least three rate cuts this year, perhaps as many as six. The sooner and faster the fed moves to lower rates, the sooner in a higher gold prices can be expected to climb.
This brings in our second gold price driver of 2020 for war. The German war theorist Carl von Clausewitz famously observed that war is an extension of politics by other means. 2024 is sure to illustrate that dictum. Over the last two years, our world has transitioned from cold diplomatic maneuvers to outright warfare on a scale not seen since World War two.
Intensifying combat in Europe and rapidly spreading conflict in the Middle East threaten international trade, global oil supplies, even direct military engagement between the U.S. and Iran. Taiwan's recent elections produced new leadership that gives China cover to deepen its confrontation with the U.S. and our allies. North Korea doesn't need cover to continue its incessant threats against its neighbors. Conflicts of this scale and scope tempt dictators to roll the dice on war. We know that rumors of war, threats of war, and outright warfare drive people around the world to seek the safety of gold.
The third force driving gold prices this year will be our presidential election. Margins in the race are likely to be razor thin in several crucial states, with the Electoral College outcome hanging in the balance. We can expect fierce legal and political battles preceding the election and persisting through the casting of votes by the Electoral College in December, the counting of those votes by the House of Representatives in early January, right through and perhaps beyond Inauguration Day 2025.
A succession crisis like this is, of course, unprecedented in our nation's history, and its fallout is unknowable. What is certain, however, is that the uncertainty accompanying this crisis would deeply affect our nation and radiate around the globe. The global flight to safety that follows would focus on gold, since the role of the dollar as the world's other safe haven would be placed in doubt by our political instability.
These three forces inflation, war, and our broken politics will receive intense media attention in the year ahead. This constant attention will increase the appeal of gold as a safe haven asset. Increasing demand and driving prices ever higher. And when these three forces converge, as seems most likely late in the year, the effect on gold prices could be explosive.
