Gold prices continue to climb to new highs, with analysts projecting further records and some foreseeing the metal reaching $3,000 per ounce next year as the U.S. Federal Reserve meeting approaches.
In the latest developments:
Spot gold remained steady at the previous session’s peak of $2,508.14 per ounce, as per FactSet data.
U.S. gold futures surged 0.16% to establish a new record of $2,540.8 per ounce during Monday’s Asian trading hours, building on gains from Friday.
Sabrin Chowdhury, head of commodities analysis at BMI, highlighted 2024 as a pivotal year for gold, emphasizing its role as a safe-haven asset that thrives in times of uncertainty. Factors contributing to this uncertainty include the upcoming elections, Ukraine’s recent actions, and escalating tensions in the Middle East.
The looming threat of direct conflict between Israel and Iran following recent events has added to the geopolitical backdrop. Iran’s retaliation pledge after the assassination of Hamas leader Ismail Haniyeh in Tehran has put Israel on high alert, prompting U.S. military support in the region.
Anticipation of a Federal Reserve rate cut in September has further fueled the rally in bullion prices. The confidence in a potential rate cut next month has heightened expectations, with analysts suggesting that gold could soar to $2,700 per ounce once the rate reduction cycle begins.
Lower interest rates diminish the opportunity cost of holding gold compared to interest-bearing assets like Treasurys, enhancing its attractiveness as a safe-haven investment. Additionally, reduced interest rates can weaken the dollar, making gold more appealing to holders of other currencies.
Citi analysts foresee a bullish trend for gold investors in the near term, with a target of $3,000 per ounce by mid-2025 and a fourth-quarter average price estimate of $2,550 per ounce.
Market participants are closely monitoring the economic policy symposium in Jackson Hole for insights into the Fed‘s monetary policy direction, with Fed Chair Jerome Powell scheduled to address the gathering. This event could provide crucial clarity on the interest rate trajectory, influencing gold prices in the coming months.
