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Gold prices hit record high as expectations rise for the to Fed cut interest rates in 2024

Gold prices hit a record high of $2,152.30 per ounce on Monday, according to the NYMEX continuous gold contract.

The price of gold has been steadily rising in 2023, with the commodity up 14% year to date.

The rally comes as investors price in interest rate cuts from the Federal Reserve in 2024.

Gold prices hit a record high on Monday as investors prepare for potential interest rate cuts from the Federal Reserve in 2024.

The NYMEX Gold Continuous Contract peaked at $2,152.30 per ounce on Monday, before paring gains to around $2,087.

The prior intraday record high was different across different datasets, but they all went back to 2020. According to Dow Jones Market Data, it was $2,089.20. For Refinitiv, it was $2,072.50, while Bloomberg put it at $2,075.47.

Gold prices are up 14% year to date. But most of those gains have occurred since early October as the metal was trading sideways throughout most of 2023 until then.

The recent surge has been supercharged by increasing expectations among investors that the Federal Reserve is not only done with its interest rate hiking regime, but that it could cut interest rates as soon as the first quarter of 2024.

The CME Fed Watch Tool currently projects that the Fed will institute its first rate cut at its FOMC meeting in March with next year’s cuts totaling 125 basis points.

Some economists expect even more cuts. ING forecasts 150 basis points in 2024 and a further 100 basis points of rate cuts in 2025. If those predictions prove correct, gold prices might not be done rising.

That’s because alternative like cash will be a lot less appealing to investors as interest rates start to fall. Gold prices also tend to rise when the Federal Reserve is in easing mode, whether it’s cutting interest rates or increasing its balance sheet, on fears of potential inflation as well as the long-term effects that easing could have on the stability of the US dollar and economy.

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