Article by: ETO Markets

As we enter the new year, global inflation pressures are expected to decrease, paving the way for a potential cycle of interest rate cuts. Central banks such as the ECB, BoE, and Fed are likely to initiate this process, possibly starting as early as the end of Q1, although it could be a bit later in the year considering the less dovish stance taken by the former two banks in December.

The Fed has outlined plans for three rate cuts in 2024, with the timing and extent depending on incoming data. Just as we witnessed a boost in the price of gold in 2023 due to expectations of rate cuts, 2024 could see even more significant gains as central banks actually implement looser policies and yields decline further. Given the recent high inflation, there is considerable pent-up demand for gold as it is often viewed as a reliable store of value.

Amidst any significant short-term weakness, gold is likely to find support, considering the loss of value in fiat currencies. Much of the buying activity may occur before the actual rate cuts, as markets tend to anticipate future developments. The beginning of the year could be a positive period, especially with the bullish momentum observed in late 2023. Traders should keep an eye on these potential opportunities in the forex market.