By Brijesh Patel and Sherin Elizabeth Varghese
(Reuters) – Geopolitical tensions, uncertainty created by the upcoming U.S. Presidential election and potential rate of interest cuts look set to assist energy gold costs, already at data above $2,500 an oz., to even loftier ranges.
A rally which has lifted gold to $2,526.07 an oz. this week has made the dear steel one among 2024’s finest performing belongings. It’s up almost $460 or greater than 20% to this point this yr.
Gold, usually used as a hedge in opposition to political and financial uncertainty, has been boosted by Russia’s battle on Ukraine and hostilities within the Center East.
“We could see gold moving towards $2,600 or $2,700 … towards the end of the year,” stated Amelia Xiao Fu, head of commodity markets at BOCI. “We have the U.S. elections, there’s still a lot of uncertainty.”
Rising expectations the U.S. Federal Reserve will begin slicing charges in September have boosted the enchantment of safe-haven belongings resembling gold and U.S. Treasuries, and undermined the greenback which has a unfavorable relationship with bullion.
“We still see very significant value in long gold positions, and maintain our bullish $2,700 forecast for 2025. Fed rate cuts are poised to bring Western capital back into the gold market,” stated Lina Thomas, commodities strategist at Goldman Sachs.
Robust assist additionally comes from China, which purchased gold for its reserves for 18 consecutive months to April earlier than suspending its program as a consequence of elevated costs.
“Chinese price sensitivity insures against hypothetical large price declines, which would likely reinvigorate Chinese buying,” Thomas added.
Additional contributing to the upsurge in gold costs is that buyers have been piling into physically-backed gold alternate traded funds (ETFs), which recorded internet inflows final week of 8.5 metric tons, in response to the World Gold Council (WGC).
“Rate cuts could see interest rate-sensitive investors return to gold via ETFs,” stated Ole Hansen, head of commodity technique at Saxo Financial institution.
