The end of 2023 and the start of 2024 presents an environment that is broadly supportive of gold prices. Interest rates are expected to be cut back aggressively, as such, the US dollar and Treasury bond yields have been in broad decline. Since gold is a non-interest-bearing asset, it can often become more appealing during times when interest rates are falling (or expected to fall soon) as the opportunity cost of holding the precious metal declines.
The one issue here is if inflation sees further progress and interest rates remain well above 5%. Such a scenario would see real interest rates (nominal interest rate – inflation rate) rise and this can be bad for gold.
