Analysts expect the price of gold to break through the $3,000 mark next year. This week, Powell's interest rate cut signal may trigger a "major shock" in the gold price

According to the Wisdom Financial APP, the recent strong performance of gold futures prices has undoubtedly become a major focus in the financial markets. The weakening of the US dollar and market expectations of a possible interest rate cut by the Federal Reserve have jointly driven the rise in gold prices. Last Friday, the spot gold price broke through $2,500 per ounce, setting a new historical high, pushing the price of a gold bar weighing around 400 ounces to over $1 million.

In the global precious metals trading center in London, the standard weight of a gold bar is usually 400 troy ounces, but the pure gold content can fluctuate between 350 and 430 ounces. In addition, there are smaller and lower-priced gold bars available for individual investors to choose from, such as those sold by Costco (COST.US).

According to data from Metals Focus, global central banks net purchased 483.3 tons of gold in the first half of 2024, equivalent to nearly 40,000 gold bars. This buying behavior, coupled with the expected loose monetary policy of the Federal Reserve, has become an important factor supporting the strong upward trend in gold prices.

Analysts at SP Angel pointed out that the weakening of the US dollar and the decline in US Treasury yields were the main reasons for the sharp rise in gold prices last Friday afternoon and maintaining high levels. At the same time, regional banks are encouraged to invest cash in the real economy rather than in bonds, prompting Chinese buyers to turn their attention to gold as a safe haven asset.

As the Federal Reserve meeting approaches, the market generally expects the price of gold to continue to rise, with some analysts even predicting that the price of gold will reach $3,000 per ounce next year. However, David Meger of High Ridge Futures warns that if the Federal Reserve only indicates a 0.25 percentage point rate cut without hinting at a larger cut, the market may be disappointed.

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, also pointed out that the rapid rise in gold prices has reached a level that has made many traders hesitant. He emphasized that if Federal Reserve Chairman Jerome Powell does not clearly indicate the possibility of further rate cuts, gold may face selling pressure.

Sabrin Chowdhury, Head of Commodity Analysis at BMI, expects gold prices to reach multiple highs in 2024, especially against the backdrop of the US presidential election, the Russia-Ukraine conflict, and tensions in the Middle East, making gold's appeal as a safe haven asset more pronounced. She further stated that once the Federal Reserve starts cutting rates, the price of gold is expected to reach $2,700 per ounce.

Analysts at Citigroup are also optimistic about the gold market, expecting investor confidence to rise in the next three to six months, with a mid-2025 gold price target of $3,000 per ounce and an average price forecast of $2,550 per ounce in the fourth quarter.

This week, traders will closely monitor the annual economic policy symposium held in Jackson Hole, where Federal Reserve Chairman Powell's remarks may provide more clues on interest rate prospects. The most active Comex gold December delivery contract closed up 0.1% on Monday at $2,541.30 per ounce, setting a new historical high. Meanwhile, both August Comex gold and silver also reached their respective historical highs For investors, gold ETFs such as SPDR Gold Trust (GLD.US), VanEck Gold Miners ETF (GDX.US), Junior Gold Miners ETF (GDXJ.US), and Gold Trust ETF (IAU.US) provide a diverse range of investment options to capture the upside potential of the gold market