Gold price: entering the new year 2024 with upward momentum

At the finish line of the old 2023, the price of gold was able to extend its growth since the beginning of the year. In dollar terms, the yield of gold in 2023 on the penultimate trading day (December 28) was just under 14% (more precisely +13.84%). One ounce of the precious metal on the spot market now costs $2076 and may even reach a new all-time high in closing price by the end of the year.

In the European currency, gold's year-to-date return was +9.57%, but it is just under half a percent short of double digits. In the Eurozone currency, a troy ounce of gold is currently worth €1867 per ounce. That means the German gold price is just 2% below the all-time high of €1903.85 reached on December 1, 2023 based on the daily closing price.

Past statistics also speak in favor of an end-of-year rally and a positive end to the week or year: on average over the last decade, including in the long term, the beginning of the year has been a time of positive gold prices.

One important aspect here is investors' expectations regarding future interest rate trends. If yields in the money and capital markets, as well as key interest rates of central banks are expected to fall, this tends to have a positive effect on the non-interest-bearing precious metal.

After the latest meeting of the world's most influential central bank, the US Federal Reserve, and the recent moderate inflation data in the States and Eurozone, both monetary policymakers and investors have significantly lowered their expectations for key interest rates.

Inflation
At the same time, the inflation dynamics in the US and Germany are quite similar. However, the price index in the US shows a slightly higher rate of inflation overall in recent years.

Inflation will continue to be a problem in the coming year 2024. In Germany in particular, in addition to base effects, inflation will be driven by the next phase of CO2 pricing, a VAT increase in the catering sector, a near doubling of truck tolls and further administrative price increases, such as the introduction of a mandatory packaging deposit for dairy products.

Combined with recessionary trends, especially in Germany but possibly also in the US, this outlook is also favorable for the current gold price dynamics.