Gold News

Gold Prices Rise $100 Below Record Spike as Real Rates Fall into 2024 But GLD ETF Shrinks

GOLD PRICES rose Thursday in London, extending the precious metal's run above $2000 per Troy ounce towards a record-long stretch as analysts and traders continued to foresee the US Federal Reserve cutting Dollar interest rates from today's 2-decade highs early in 2024.
The Dollar gold rate reached $2039, still $100 below Monday morning's record gold price spike, while so-called real interest rates, as tracked by the inflation-protected yield offered by 10-year US Treasury TIPS, held below 2.00% per annum for a 2nd day running at the lowest since mid-September.
Down by more than half-a-percentage point from late-October's 13-year high, those real rates typically show a strongly inverse correlation with Dollar gold prices.
Chart of 10-year TIPS yield (left) vs. Dollar gold price (inverted). Source: BullionVault
"We think Fed easing will be quite supportive for gold in 2024 and a decline in real rates will push prices higher," says Swiss bank and London bullion market-maker UBS' strategiest Joni Teves, predicting a gold price of $2200 in 12 months' time.
After this week's gold spike to fresh record prices, "we think gold will continue to see new highs," Teves adds.
"Market consensus anticipates a 'soft landing' in the US," says a 2024 outlook from the mining industry's World Gold Council – "historically not particularly attractive for gold
"[But] this time around, heightened geopolitical tensions in a key election year for many major economies, combined with continued central bank buying, could provide additional support for gold...And a global recession is still on the cards. This should encourage many investors to hold effective hedges, such as gold, in their portfolios."
An allocation of 6% to 7% in gold "would be quite prudent" going into 2024 reckons senior commodity strategist Daniel Hynes at Australasian bank ANZ, if not higher "depending on what other asset classes you have in that portfolio."
But profit-taking continued in gold in November, with gold-backed exchange-traded funds – a popular choice for private investors and some wealth managers – shrinking in size for the 6th month running with 0.3% liquidation as gold rose to a new month-end Dollar record at $2035 per Troy ounce.
The giant GLD gold ETF yesterday held unchanged in size after snapping a 2-day run of net inflows on Tuesday – only its 3rd such run since the end of August.
With the GLD now 4.0% smaller across 2023 so far, the entire gold ETF sector has shrunk by 6.7% since New Year's Eve according to data gathered by the World Gold Council.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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