In a noteworthy financial development, gold prices continued their upward trajectory on Thursday, driven by heightened anticipation of a U.S. interest rate cut in September. The precious metal’s value remains just shy of the record high achieved in the previous session.
As of 0218 GMT, spot gold increased by 0.1% to $2,461.27 per ounce. This follows Wednesday’s historic peak of $2,483.60 per ounce. Similarly, U.S. gold futures saw a 0.2% rise, reaching $2,465.00.
Ryan McIntyre, senior portfolio manager at Sprott Asset Management, attributes this bullish trend to the twin catalysts of decreasing interest rates and the impending U.S. elections. “Holdings of gold in ETFs (exchange-traded funds) appear to have bottomed in May and they are now starting to increase again,” McIntyre noted. “There could be a new wave of demand for gold coming through this channel, particularly with financial advisors and institutions.”
The appeal of non-yielding bullion typically grows as interest rates decline. Fed Governor Christopher Waller and New York Fed President John Williams have both pointed to a potential shift towards a more lenient monetary policy. Meanwhile, Richmond Fed President Thomas Barkin expressed optimism over the broadening decline in inflation.
Market expectations, as reflected in CME’s FedWatch Tool, predict a 25 basis point reduction at the Federal Reserve’s September meeting. This sentiment is further supported by a recent Fed survey, which indicated that U.S. economic activity expanded at a slight to modest pace from late May through early July, with businesses anticipating slower growth in the near future.
Citi Research has issued a bold forecast, suggesting that gold could rise to between $2,700 and $3,000 over the next 6-12 months, regardless of the outcome of the U.S. election. The same report predicts silver will reach $38 per ounce. Investors are advised to hedge their equity and currency exposures amid potential global trade tensions, particularly between the U.S. and China, which could further enhance the attractiveness of precious metals.
On Thursday, spot silver saw a 0.2% increase to $30.35 per ounce. Platinum remained steady at $994.81, while palladium experienced a 0.4% uptick, reaching $955.77.
As the global economic landscape continues to evolve, all eyes are on the Federal Reserve’s next moves and their potential impact on the precious metals market.