On Thursday, gold prices maintained their upward trajectory, hovering near record highs as investor sentiment remained buoyed by mounting expectations of an interest rate cut by the U.S. Federal Reserve in September. Spot gold saw a slight increase of 0.1% to reach $2,461.27 per ounce by 0218 GMT, following its recent peak of $2,483.60 recorded in the previous session. Similarly, U.S. gold futures also advanced by 0.2% to trade at $2,465.00 per ounce, reflecting continued bullish sentiment in the market.
The driving force behind the surge in gold prices is the growing consensus among market participants that the Federal Reserve will take steps to lower interest rates in response to ongoing economic uncertainties and geopolitical tensions. This anticipation has spurred demand for gold, traditionally seen as a safe-haven asset during periods of market volatility and economic instability.
Ryan McIntyre, senior portfolio manager at Sprott Asset Management, emphasized that gold’s appeal is further bolstered by its role as a hedge against economic and geopolitical risks. He pointed out that holdings of gold in exchange-traded funds (ETFs), which bottomed out in May, have started to rebound. This uptick suggests renewed interest from institutional investors and financial advisors seeking to diversify their portfolios and protect against potential market downturns.
Federal Reserve officials, including Fed Governor Christopher Waller and New York Fed President John Williams, have hinted at a more accommodative monetary policy stance in recent statements. Their remarks have been echoed by market expectations, as indicated by CME’s FedWatch Tool, which forecasts a 25 basis point reduction in the federal funds rate at the Fed’s upcoming September meeting.
Looking forward, analysts at Citi Research anticipate further price increases for gold regardless of the outcome of the upcoming U.S. presidential election. They predict gold could reach between $2,700 and $3,000 per ounce over the next 6-12 months, underscoring the metal’s potential as a store of value amid global economic uncertainties and potential trade tensions between major economies.
In broader market movements, spot silver also saw a modest uptick, rising 0.2% to $30.35 per ounce. Platinum prices remained steady at $994.81 per ounce, while palladium registered a modest gain of 0.4% to $955.77 per ounce. These movements reflect ongoing investor appetite for precious metals as alternative investment options in a low interest rate environment.
Overall, the current bullish sentiment surrounding gold and other precious metals underscores their role as essential components of diversified investment portfolios. As economic and geopolitical uncertainties persist, gold is likely to continue attracting investors seeking stability and protection against potential market volatilities in the months ahead.