Gold is stealing the spotlight yet again with bullish prices gracing headlines – particularly those regarding spot prices per troy ounce hitting all-time highs of US$2500, leading to gold bar prices hitting US$1M for the first time in history.
BNN Bloomberg reported that central banks made net purchases of 483.3t of gold in H1 2024, equivalent to nearly 40,000 gold bars, making it one of the reasons for this year’s sharp rise in gold prices.
“Central-bank demand for gold has surged in the past five years, swallowing nearly one in every 10oz produced by the mining sector on official data.” Adrian Ash, BullionVault’s director of research, said in a commentary this week.
According to UBS, the sharp rise in gold prices can also be attributed to a weakening US dollar and increasing anticipation of a Fed rate cut in September. Escalating tensions in the Middle East also contributed to the heightened demand for gold. Furthermore, the dollar index fell by 0.6%, marking its fourth consecutive week of decline, which made gold more attractive to global investors.
The next key event for investors is Fed Chair Jerome Powell’s upcoming speech at Jackson Hole, where markets will be looking for indications on whether the central bank will cut rates by 25 or 50 basis points at its September meeting.
The annual symposium arrives at a pivotal moment for the US economy. Interest rates have remained at their highest levels in decades for over a year, successfully reducing inflation but also slowing economic activity. At the same time, the unemployment rate has increased, leading Wall Street to anticipate that the Fed will start cutting interest rates in September.
Analysts are feeling bright about the future of gold prices, with Yahoo finance reporting positive outlooks from several analysts: “Accordingly, we expect the gold price to rise further to US$2,600 by the middle of next year,” senior commodity analyst Carsten Fritsch wrote. “At the end of 2025, the gold price is likely to fall to US$2,550 (previously US$2,200) in view of the renewed rise in inflation and the associated speculation of interest rate hikes in the following year.” Other analysts, according to Bloomberg, are even more bullish. Bart Melek, global head of commodity strategy at TD Securities, stated on Friday that gold could hit US$2,700/oz in the coming quarters, citing prospects for Fed easing.
