Gold prices have been steadily climbing to new heights, with market analysts predicting further records as global uncertainties persist and the U.S. Federal Reserve's upcoming meeting looms. Spot gold recently held steady at its record high of $2,508.14 per ounce, while U.S. gold futures surged by 0.16% to set a new benchmark of $2,540.8 per ounce during Monday’s trading in Asia, according to FactSet data. This sustained momentum has analysts forecasting that the precious metal could soar to $3,000 per ounce by next year.
The ongoing surge in gold prices is largely attributed to its enduring appeal as a safe-haven asset, especially in times of economic and geopolitical uncertainty. “2024 is the year where gold is supposed to reach multiple highs,” said Sabrin Chowdhury, head of commodities analysis at BMI. She emphasized that gold thrives during periods of instability, noting, “uncertainty is at its peak,” with the year ahead being marked by critical events like the U.S. elections, escalating tensions in the Middle East, and the ongoing conflict between Ukraine and Russia.
Geopolitical tensions, particularly in the Middle East, are further fueling gold's rise. The region is on edge as Israel and Iran inch closer to direct conflict following the assassination of Hamas political leader Ismail Haniyeh in Tehran. In response, Iran has vowed retaliation, prompting Israel to heighten its military readiness. The situation has escalated to the point where the U.S. has deployed a carrier strike group and a guided-missile submarine to support Israel, signaling the potential for broader conflict.
Adding to the bullish outlook for gold is the increasing likelihood of a U.S. Federal Reserve rate cut in September. The July Fed meeting has bolstered investor confidence that a rate cut is imminent. “Once the Fed starts to cut rates, likely next month, gold could reach $2,700 an ounce,” Chowdhury predicted, reflecting a sentiment shared by many in the market. Lower interest rates generally reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive compared to interest-bearing alternatives such as U.S. Treasurys.
Moreover, lower rates tend to weaken the U.S. dollar, further boosting gold's appeal for investors holding other currencies. This dynamic is expected to sustain bullish sentiment among gold investors over the next three to six months. Citi analysts, in a recent note, echoed this optimism, projecting a gold price target of $3,000 per ounce by mid-2025, with a fourth-quarter average price forecast of $2,550 per ounce.
Traders and investors are also keeping a close eye on the upcoming annual economic policy symposium in Jackson Hole, where Federal Reserve Chair Jerome Powell is set to speak. His remarks could provide greater clarity on the interest rate outlook, potentially influencing gold's trajectory in the months ahead.
(Source:www.cnbc.com)
The ongoing surge in gold prices is largely attributed to its enduring appeal as a safe-haven asset, especially in times of economic and geopolitical uncertainty. “2024 is the year where gold is supposed to reach multiple highs,” said Sabrin Chowdhury, head of commodities analysis at BMI. She emphasized that gold thrives during periods of instability, noting, “uncertainty is at its peak,” with the year ahead being marked by critical events like the U.S. elections, escalating tensions in the Middle East, and the ongoing conflict between Ukraine and Russia.
Geopolitical tensions, particularly in the Middle East, are further fueling gold's rise. The region is on edge as Israel and Iran inch closer to direct conflict following the assassination of Hamas political leader Ismail Haniyeh in Tehran. In response, Iran has vowed retaliation, prompting Israel to heighten its military readiness. The situation has escalated to the point where the U.S. has deployed a carrier strike group and a guided-missile submarine to support Israel, signaling the potential for broader conflict.
Adding to the bullish outlook for gold is the increasing likelihood of a U.S. Federal Reserve rate cut in September. The July Fed meeting has bolstered investor confidence that a rate cut is imminent. “Once the Fed starts to cut rates, likely next month, gold could reach $2,700 an ounce,” Chowdhury predicted, reflecting a sentiment shared by many in the market. Lower interest rates generally reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive compared to interest-bearing alternatives such as U.S. Treasurys.
Moreover, lower rates tend to weaken the U.S. dollar, further boosting gold's appeal for investors holding other currencies. This dynamic is expected to sustain bullish sentiment among gold investors over the next three to six months. Citi analysts, in a recent note, echoed this optimism, projecting a gold price target of $3,000 per ounce by mid-2025, with a fourth-quarter average price forecast of $2,550 per ounce.
Traders and investors are also keeping a close eye on the upcoming annual economic policy symposium in Jackson Hole, where Federal Reserve Chair Jerome Powell is set to speak. His remarks could provide greater clarity on the interest rate outlook, potentially influencing gold's trajectory in the months ahead.
(Source:www.cnbc.com)