Gold prices are hitting new highs and analysts are expecting more records, with some predicting the metal will reach $3,000 a troy ounce next year on the back of this week’s US Federal Reserve meeting, CBS reports (CNBC).
Spot gold held steady at a record high of $2,508.14 a troy ounce in the latest session, according to FactSet data, while U.S. gold futures jumped 0.16 percent to set a fresh record of $2,540.8 for troy ounce during Asian hours on Monday, extending Friday’s gains.
“2024 is the year gold is expected to hit multiple highs,” said Sabrin Chowdhury, head of commodities analysis at BMI, citing gold’s appeal as a safe-haven asset.
Israel and Iran appear on the brink of direct conflict after Iran vowed to retaliate following the assassination of Hamas political leader Ismail Haniyeh in Tehran earlier this month. Israel put its military on high alert and the US sent an aircraft carrier strike group and a guided-missile submarine to the region to bolster its ally’s defenses.
Another factor driving prices is the growing chance of a Fed rate cut in September. The US central bank’s previous meeting in July boosted investor confidence that a rate cut next month is highly likely.
“Once the Fed starts cutting rates, possibly next month, gold could reach $2,700 per troy ounce,” said the BMI analyst. Other analysts share a similar bullish sentiment.
Lower interest rates lower the opportunity cost of buying gold, making it more attractive relative to interest-bearing assets like Treasuries, which compete with gold as a safe haven.
The bank added that it sees a target of $3,000 a troy ounce by mid-2025, and a fourth-quarter average price forecast of $2,550 a troy ounce.
Traders will be keeping an eye on the annual economic policy symposium in Jackson Hole this week, which could provide more clarity on the outlook for interest rates, with Fed Chairman Jerome Powell speaking at the meeting.
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