This trend is expected to continue, with some analysts predicting that gold could surpass $2,700 per ounce by 2025.
These lower interest rates make gold a more attractive option as it does not bear interest, reducing the opportunity cost for investors.
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Gold prices Oil prices soared this week to a record high of $2,600 per ounce. This Friday, it is trading at $2,629 and is heading steadily towards $2,700, driven by expectations of further cuts in US interest rates and growing global uncertainties.This rally marks a significant milestone as investors increasingly view gold as a safe haven amid economic turmoil.
Spot gold rose 0.7% to $2,629 per ounce, after hitting a high of $2,609.62. Similarly, U.S. gold futures rose 0.6% to $2,630.00. Other precious metals also followed suit, with silver gaining 11% to $31.12 per ounce.
Rate cuts boost gold demand
The Federal Reserve kicked off its easing cycle with a substantial half-percentage point interest rate cut on Wednesday. Policymakers’ projections indicate that there could be another half-point reduction before the end of the year, followed by a full-point cut next year and a further half-point decline in 2026. These lower interest rates make gold a more attractive option since it does not bear interest, which reduces the opportunity cost for investors.
Given the growing global uncertainty, including geopolitical tensions such as the war in Ukraine and the upcoming presidential election in the United States, investors are increasingly looking to gold as a safe haven asset.
It also happens that after a period of outflows, gold-backed ETFs have seen renewed interest, with positive inflows in several regions since May 2024, which also supports price increases.
Source: Ambito
