Gold heads for first annual gain since 2020 as traders bet US Fed will dial back interest rates in 2024
- This year’s price movement has mostly been dictated by changing views on the Fed’s next steps on interest rates
- Gold has also been underpinned by geopolitical uncertainty, with 41 per cent of the world’s population due to go to the polls in 2024
Bullion fluctuated on the final trading day of 2023, putting it on track to end the year about 13 per cent higher.
Concerns around recession risks also boost the case to own debt, with traders betting global central bankers may have to aggressively cut rates to bolster growth. Such views have seen bullion gain nearly 13 per cent since October 6 amid declines in Treasury yields and the dollar, which is on pace for its worst year since 2020.
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Chinese consumers sell off old jewellery amid record high gold prices
Gold surged to a record high in early December as traders bet the US central bank will start cutting rates at a sharper pace next year, only to quickly give up those gains when those positions were seen as overdone. It surged above US$2,000 again in mid-December after Fed officials in their last meeting of the year gave the clearest signal yet that an aggressive rate hike campaign is over.