Gold prices slump to begin 2024

ConsumerAffairs

Experts say to watch the Fed for clues to its price direction

Just like stocks, gold priced in U.S. dollars has begun 2024 moving lower. The price has dipped after hitting record highs late last year.

But where does it go from here? No one has a crystal ball but the experts ConsumerAffairs consulted suggest price movement hinges on the geopolitical environment and several economic factors.

Alex Ebkarian, COO and co-founder of Los Angeles-based Allegiance Gold, believes conditions are ripe for gold prices to increase in 2024.

“Economic uncertainty may push gold higher,” Ebkarian told ConsumerAffairs. “Uncertainty makes investors nervous and when investors get nervous, the money goes to gold.”

Ebkarian says investors should look to the Federal Reserve for clues. If the Fed delays its expected rate cuts, he says that’s a sign that inflation is still a concern and that’s bullish for gold.

Liam Hunt. director and analyst at SophisticatedInvestor.com, says any rise in gold prices would likely be driven by continued geopolitical tensions or conflict spillovers in the Middle East, inflationary pressures, or unexpected Fed policies that would boost demand for the yellow metal as a safe-haven asset.

Buying opportunity ahead?

“On the other hand, a pullback in gold prices is more likely to occur than not,” Hunt told us.

“This is because interest rates are expected to start declining in the second quarter of the year, which would see easy money flowing back into more speculative asset classes. Central Bank monetary easing policies, which are anticipated in the months ahead, would likely have a bearish effect on gold prices in the immediate term.”

Robert Johnson, professor of finance at the Heider College of Business at Creighton University, prefers investing in stocks over other types of assets, pointing out their long-term consistent gains.

“Simply put, one should never consider investing in gold if you have a long-term time horizon, as the long-term returns are far below those of equities,” Johnson said. 

But very few personal finance advisors suggest putting all of your eggs in the gold basket. CNBC’s host of “Mad Money,” Jim Cramer, has advocated keeping some money invested in the precious metal as a hedge against inflation. He recently advised his followers to choose gold over cryptocurrency after the spike in Bitcoin drew investors to that digital currency.

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