After the gold price reached $2500, analysts are now eyeing $3000
The price of gold has already hit multiple highs this year. BMI analysts predict that with the next Federal Reserve meeting approaching, there is still more room for gold prices to rise
With increasing market uncertainty and the continued expectation of a September rate cut by the Federal Reserve, gold, as a safe-haven asset, continues to appreciate.
According to FactSet data, the spot gold price stabilized after hitting a new high of $2508.14 per ounce on August 19, while US gold futures rose by 0.16% during Monday's Asian session, setting a new record of $2540.8 per ounce, extending the gains from last Friday.
Citigroup analysts stated in a report on Monday that gold investors are bullish for the next three to six months.
The bank also mentioned that they expect the gold price to reach $3000 per ounce by mid-2025 and forecast an average gold price of $2550 per ounce in the fourth quarter of this year.
Sabrin Chowdhury, the head of commodity analysis at BMI, highlighted the attractiveness of gold as a safe-haven asset, noting that with increasing market uncertainty, 2024 is expected to be a year where gold sets multiple historical highs.
"2024 is a US presidential election year, and tensions in Russia, Ukraine, and the Middle East are escalating. Gold thrives in uncertainty, and currently, uncertainty is at its peak."
Another factor driving the rise in gold prices is the increasing likelihood of a September rate cut by the Federal Reserve. The July Fed meeting boosted investors' confidence in a potential rate cut in September. BMI analysts stated:
"If the Fed starts cutting rates, which is likely next month, the price of gold could reach $2700 per ounce."
Lower interest rates reduce the opportunity cost of buying gold, making it more attractive relative to interest-bearing assets like government bonds that compete with gold as a safe-haven asset.
Furthermore, lower rates also put pressure on the US dollar, making dollar-denominated gold more attractive to investors holding other currencies.
This week, traders will also focus on the annual economic policy symposium in Jackson Hole, where Federal Reserve Chairman Jerome Powell is expected to speak, potentially providing more clarity on the outlook for US interest rates