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Economic Viewpoint

Why Do Gold Prices Keep Setting New Records?

June 19, 2024
Marc-Antoine Dumont
Senior Economist

  • In this Economic Viewpoint, we'll be looking at what's behind the recent surge in gold prices.
  • While a number of factors have contributed, there's no one clear reason we can point to. Uncertainty often pushes prices up—but the risks of a recession or stock market correction have softened lately. Geopolitical tensions remain heightened, but aren't enough to support such a gain.
  • Central bank demand for gold has also ballooned over the last five years, from 14% to 23% of total gold demand. While de-dollarization  has spurred some of this demand, with countries seeking to protect themselves against any weaponization of the US dollar, this support is merely reinforcing the trend that began after the 2008 financial crisis.
  • The usual economic indicators—inflation, the US dollar, stock indexes and US 10-year Treasury Inflation-Protected Securities yields —are no longer providing any real explanation for gold's performance. In fact, the historical relationship between real yields and gold prices seems to have broken down.
  • We believe that as inflation converges toward central bank targets and interest rates are cut, especially in 2025, the price of gold should gradually lower. All of this puts our end-of-year forecasts at US$2,100 per ounce for 2024 and US$1,900 per ounce for 2025.

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NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.