Gold Price Outlook – December 2023

“Gold Price Outlook
Gold prices have gone from strength to strength since early October, briefly (about 20 minutes) touching a fresh record level in early December. Tensions in the Middle East helped gold prices higher initially. However, renewed market expectations of lower interest rates going forward helped propel much of the gains in gold prices over the past couple of months.

CPM Group has been forecasting stronger gold prices during 2024, possibly starting in the fourth quarter of 2023, for some time now. That strength has shown up in markets. CPM Group still expects stronger, higher gold prices in 2024 than seen in 2023.

There are numerous reasons, both political and economic, which warrant such higher price expectations. That said, since prices have risen more sharply than previously expected in the fourth quarter of 2023, the pace of growth in prices during 2024, especially during the first half of the year, is likely to be slower than previously forecast, since the gains will be from a higher base. There could be bouts of profit taking during December, as markets seem to have become excessively optimistic about the pace and timing of interest rate reductions next year. A combination of seasonal strength in prices and the Lunar New Year celebration in February 2024 should limit any such downside in gold prices during such periods of profit-taking. A pullback in gold prices toward $1,995 is quite likely during such a period of profittaking.

Heading into the first quarter of 2024, if economic data do not show signs of weakness, gold prices could see some further weakness toward $1,940 toward the end of that quarter.

On the other hand, if economic data start to show signs of weakness over the next several months, a retest of at least the recent record gold prices should not be too surprising.

Overall, CPM expects higher prices in 2024 with new records set on both an annual and intraday basis. It is just that the gold price increases may come over the course of the year, stronger after the first quarter even though the first quarter is the period of strongest seasonal strength in gold prices that typically lead to the high prices for the year being set at that period. Real-time developments, from the economy to the U.S. election to international crises easily over-ride such seasonal price patterns, however.”