How high will the price of gold go? Here's what some experts think
Investor interest in gold is rising, which isn't surprising given persistent inflation and elevated interest rates continue to drag on the economy. Historically, gold tends to perform well during periods of economic uncertainty, as investors look for a hedge against inflation and a stabilizing asset to add to their portfolios.
Indeed, investors are turning to the safety of gold in large numbers, driving its price to an all-time high of $2,125.89 this past December. That mark was surpassed earlier this month with gold trading at $2,160 per troy ounce, and most recently, gold's price hit $2,170.16 on March 22.
Investors considering the precious metal, then, would be served by understanding where the price of gold could be heading. Below, we'll take a closer look at what's behind gold's rising price trend and just how high the price of gold will go.
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How high will the price of gold go?
To understand how far the price of gold can potentially rise, it's important to know why it recently hit all-time highs.
A recent J.P. Morgan report attributes gold's surging prices in late 2023 to a confluence of factors, including increased purchases from central banks, rising concerns over geopolitical conflicts in the Middle East and Eastern Europe, inflation and anticipated Federal Reserve interest rate cuts.
Certainly, economists and precious metals analysts largely agree that uncertainty in many sectors is leading the flight to gold.
"Let's start macro, gold is your safety play, so the more people feel nervous or uncertain, the more gold is viewed as a safe haven," says Matt Willer, a Phoenix Capital Group Holdings partner in Denver, Colorado. "The reality is we are littered with uncertainty. We have the tail of inflation, tension around the world, an election year [and] elevated interest rates, which all perpetuate the flow of funds into gold."
Similarly, Eric Croak, CFP and president of Croak Capital, a wealth management firm in Toledo, Ohio, says a "combination of specific factors" have spurred gold's soaring price, but one factor may weigh more heavily.
"The recent surge in gold prices is primarily driven by softer U.S. economic indicators," says Croak. "These market conditions have boosted gold's demand while diminishing the demand for other commodities. This is largely due to the higher level of trust placed in assets like gold, silver and diamonds compared to other investment options."
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Gold's record price on March 22 was largely attributed to the Federal Reserve's Open Market Committee (FOMC) meeting that week, in which Fed Chair Jerome Powell confirmed the committee seeks to cut interest rates three times in 2024.
Croak adds: "I expect gold prices will be volatile leading up to the Federal Reserve's April meeting. Until that time, I think the price might move within a range of $2,140 to $2,200. A breakout on either side of this range could lead to an additional movement of around $50 in the direction of the breakout."
"The fact that gold has broken out to a new all-time high and has no technical overhead supply is positive for the long term," says Stephen Akin, an investment advisor at Akin Investments in Charleston, South Carolina. "Technical analysis would indicate the price could rise to $2,300 to $2,400 within a one to two year time period."
Given the myriad of factors that influence the price of any asset, including precious metals, it's impossible to predict with certainty where the price will go. However, we can look to leading indicators and fundamentals to understand what gold's future performance might look like. Along those lines, Sean Casterline, president at Delta Private Wealth, maintains a strong outlook for gold, even if there is a pull-back.
"We do not believe gold will fall in the near future," says Casterline. "It has run up substantially in the last couple of months. But that run took the metal out of a three-year trading range. It could certainly take a breather in the short term. However, I wouldn't expect a pullback to be more than 3% to 5%. If it pulls back, momentum investors won't allow it to fall any further. Remember, previous resistance is now support."
The bottom line
Inflation, geopolitical uncertainty and central bank activity are among several factors pushing the price of gold to its recent peak performance. You might consider adding a slice of the yellow metal to your portfolio for diversification or to hedge against inflation.
Still, it's important to maintain a balanced portfolio, and many financial experts recommend allocating no more than 10% of your assets to gold. Consider your risk tolerance level and consult your financial advisor or accountant to ensure the asset aligns with your overall investment plan.
