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How does gold react to the interest rate cuts of 2024?

Published by Mattias Söderström in category Articles on 16.04.2024
Gold price (XAU-SEK)
24957,40 SEK/oz
  
+ 46,30 SEK
Silver price (XAG-SEK)
336,16 SEK/oz
  
+ 12,10 SEK
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Interest rates up and down – but how does gold fare in these uncertain times? Tavex has summarized how the expected interest rate cuts will affect the gold price and what it could mean for you and your gold in 2024.

Gold’s reaction to the shifts in interest rates

Over the past two years, we have seen the Swedish Central Bank raise the policy rate from zero to four percent to combat rising inflation. Now that inflation appears to be subsiding, the question arises: Can we expect a rate cut soon?

This affects not only the economy at large but also the value of gold, which is traditionally seen as a safe investment during times of economic uncertainty.

Interest in gold has remained very high throughout 2024, largely due to gold’s sensitivity to changes in interest rates.

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What the policy rate means for you and your gold

The policy rate is the tool used by the Swedish Central Bank to steer the economy, and it affects everything from our national economy to your own wallet. This becomes clear when you see how much you pay on your mortgage, for example.

When interest rates change, many turn to gold as a safe haven for their money. In 2024, the price of gold has risen sharply, driven in part by expected interest rate cuts around the world.

The chart below shows the policy rate over the past ten years:

En graf som visar styrräntan i Sverige senaste 10 åren

Source: Swedish Central Bank.

Global economic decisions and their impact in Sweden

When major powers like the USA and the EU adjust their rates, Sweden is also affected. These changes directly impact the gold price, as many investors turn to gold when other assets seem risky. The past few years have made it particularly clear how international interest rate decisions truly drive the gold market.

Keeping an eye on the Swedish Central Bank is keeping an eye on the gold price

There will be more interest rate announcements from the Swedish Central Bank this year, reflecting the prevailing economic uncertainty. Each new announcement can be a signal about the future of the economy and directly affects those investing in gold. Keeping an eye on the various interest rate announcements can give you an edge in the gold market.

All scheduled dates for the Swedish Central Bank’s interest rate announcements in 2024

A new feature this year is that the number of interest rate announcements from Sweden has increased – we can expect eight occasions during the year:

  • February 1
  • March 27
  • May 8
  • June 27
  • August 20
  • September 25
  • November 7
  • December 19.

What lies ahead?

The excitement builds for the rest of 2024. Gold continues to be an important factor in many economic strategies, and perhaps more than ever, it is important to understand how policy rates, inflation, and gold prices interact.

If you are interested in economics or considering investing in gold, this is a year you probably don’t want to miss – book a free consultation with Tavex gold experts today if you want to know more!

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Gold price (XAU-SEK)
24957,40 SEK/oz
  
+ 46,30 SEK
Silver price (XAG-SEK)
336,16 SEK/oz
  
+ 12,10 SEK

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