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The gold market is higher today as investors spend one of the final trading days of the year in buying mode. The yellow metal has seen some benefit from increasing hopes of Fed rate cuts in 2024 as well as the ongoing threat of inflation and two wars currently taking place. Bets on a March rate cut from the Federal Reserve have been on the rise in recent action, and some key economic data may be spurring on hopes of a cut this winter.

Reports on Thursday showed that U.S. Gross Domestic Product (GDP) increased at a rate of 4.9% last quarter. This figure was lower than the previously forecast rise of 5.2% for the quarter and combined with a slight increase in weekly jobless claims, gave investors reason to worry about the economy and hope the Fed will try to keep it going with lower interest rates. Although the gold market may now stand to benefit as the tightening cycle appears to be done, any rate cuts could have a dramatic impact on gold and could send the metal sharply higher with no overhead resistance to slow it down.

The data stream will play a key role in whether the Fed does start loosening policy. Of course, the inflation rate may also have something to say about what the Fed does or does not do in the year ahead. Although inflation does remain stubbornly high and well above the Fed’s desired target of 2% annualized, the threat of any increases seems to be subsiding. Just how much the Fed could cut rates next year remains the subject of debate, however, and the central bank could try to keep rates elevated for some time to come if inflation remains above target levels.

The Fed, inflation, and interest rates are not the only major catalysts for gold in the year ahead. The two wars taking place, in Ukraine and Israel, could also play a major factor in gold. Both of these conflicts have had a few new headlines in recent weeks. The potential for a spread of nuclear weapons usage remains, however. If Iran were to get involved with Hamas against Israel, the U.S. would almost certainly decide to enter the war as a participant. If Russia were to use nuclear weapons in any form against Ukraine, it would invite other nations to become involved to prevent further use of such weapons. Thus far, the wars have been limited to their original players. Hopefully, they will stay that way until they are concluded. The threat of these conflicts worsening may keep gold and haven buyers busy in the months ahead, however, and could keep the metal from falling too far on any declines.

For the time being, the bulls remain in firm control on the daily chart. Some back-and-fill trade is expected at this point, and any decline in the price of gold may be met with aggressive buying.