- 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.
But gold prices can rise without the need for economic gloom and doom, according to Carson Group's chief market strategist Ryan Detrick.
"We don't think gold at new highs is a major warning sign of impending doom, as there are many examples in history of both stocks and gold doing just fine, most recently 2003-2007. We wouldn't be surprised at all to see another period of both assets doing well," Detrick told Business Insider on Monday.
From a technical-analysis perspective, gold prices could continue to rise if it can maintain its current breakout above $2,063 per ounce for another week, according to Fairlead Strategies' founder Katie Stockton.
"Gold closed last week above final resistance from 2020, setting up a breakout pending this Friday's close above that level. There are signs of upside exhaustion, but a decisive breakout would be a bullish long-term development and should mitigate their effect. An intermediate-term measured move targets ~$2,280 per ounce for gold upon a breakout," she told clients on Monday.
Stockton's upside price target for gold represents potential gains of 10% from current levels.