Here’s Why Commodities Will Be The Best-Performing Asset Class Once Again In 2024

Federal Reserve Signals Dovish Turn: Anticipating Rate Cuts and Market Impacts

After months of elusiveness and mixed signals – Federal Reserve Chair Jerome Powell gifted Commodity traders with an early Christmas bonus on Wednesday – after delivering his clearest message yet, that the central bank is done with its aggressive hiking campaign and will start cutting interest rates in 2024.

The Fed held interest rates at a 22-year high, but the decision came alongside new forecasts from the Federal Open Market Committee signalling 75 basis points worth of cuts next year – a more dovish outlook for rates than in previous projections.

Jerome Powell’s comments following the rate decision also pointed to a switch in tone from the central bank. The benchmark rate was now “likely at or near its peak for this tightening cycle”, he said.

The decision by the Federal Open Market Committee to hold rates steady at the current range of 5.25% to 5.50% came alongside publication of the Fed’s so-called dot plot, which showed that most officials expected rates would end next year at 4.5% to 4.75%.

Policymakers expect rates to fall even lower in 2025, with most officials forecasting they would end up between a range of 3.5% to 3.75%.

Expectations for Fed rate cuts in 2024 have been mounting since the beginning of December after Federal Reserve Governor Christopher Waller – one of the central banks most influential voices – signalled that interest rates were unlikely to rise further and could be cut if inflation continued to slow.

Waller’s comments sent Gold prices skyrocketing to an all-time record high of $2,152 an ounce, surpassing the precious metals previous all-time high of $2,075 an ounce that had been recorded only two days earlier.

Commodities on the Rise

Whichever way you look at it, one thing is clear. Jerome Powell and his colleagues at the Fed have given a green light for Commodity prices to continue their upward surge and notch new all-time record highs in the months ahead. That’s welcoming news for the bulls, but painful for anyone sitting on the sidelines, who must now decide how much FOMO they can handle.

As traders know – “the bigger the rate cut, the bigger the rally in Commodities”.

If history is anything to go by, then this new shift in narrative almost certainty sets the stage for Commodities to retain their prestigious status as the best performing asset class once again in 2024 – for the fourth consecutive year running!

Gold Price Forecast

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: