The global decline of the U.S. dollar could boost the commodity markets and precious metals in 2024. The recent dovish position of the Federal Reserve made way for expectations of deeper interest rate cuts that could negatively affect the U.S. Dollar Index. The move made gold prices surge and reach $2,075 on Tuesday at the start of 2024. The U.S. dollar index currently stands at $101 and the weakening of the USD could send it below $100.
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The dip in the U.S. dollar will provide no yields to institutional investors making gold and the commodity markets the best option for 2024. The stock market is also expected to benefit from the decline of the USD providing a bullish environment to equities.
US Dollar Decline Could Boost Commodity Markets in 2024
The Federal Reserve’s dovish tone might continue to impact the U.S. dollar index. The investments could tighten this year unless the Feds bring in hawkish changes that will help drive prices up. However, there is little insight into the Feds’ actions of turning hawkish this year as inflation is at 3.2% and yet to stabilize at 2%.
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Therefore, the commodity markets, especially gold prices could reap the rewards of a weak U.S. dollar in 2024. Gold prices remained in the green this year and are now looking to climb above the $2,100 mark. The conflict in the Middle East is also adding pressure on the U.S. dollar and is weakening the currency.
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The Israel and Palestine conflict keeps the U.S. dollar in troubled waters as investors fear a major decline. Institutional investors consider gold to be the safest haven during turmoil as it acts as a hedge against inflation. In conclusion, the commodity markets and gold could dominate the charts in 2024 and not the U.S. dollar.