Geopolitical tensions have become a key driver for the precious metals complex following developments in the Middle East. The Red Sea has become breeding ground of uncertainty, and this seems to leave Gold in the driver’s seat. The renewed US Dollar weakness has also assisted Gold in holding the high ground and continuing its advance. 

Federal Reserve policymakers have this week struck a dovish tone with most speaking about the amount of rate cuts needed in 2024 with very little push back besides the odd comment about monitoring data moving forward. The significant revision to the Fed’s policy path in last week’s dovish pivot reinforces our US rates strategist call for rate cuts to commence early in 2024. 

A friendlier Fed and falling US Dollar strength should act to remove fundamental hurdles from gold’s upside path. Indeed, Gold is our most bullish call and is to hit record levels in 2024 on a trifecta of Fed cuts, supportive central bank demand and bullion’s role as the geopolitical hedge of last resort.