Gold Prices Surge Despite Fed Rate Cut, Analysts Predict $4,000/Troy Ounce Before Year-End
Gold prices experienced notable volatility this week as markets reacted to the US Federal ReserveS monetary policy decision. Despite a 25 basis point interest rate cut on Wednesday,gold initially fell as the Fed signaled a more cautious approach to future easing,citing persistent inflation concerns. Though, the long-term bullish trend remains intact, with some analysts predicting prices could reach $4,000 per Troy ounce before the end of the year.
The price of gold reached an all-time intraday high of $3,707.40/Troy Ounce on Wednesday, following a record of three consecutive closing highs the previous two weeks – Friday, Monday, and tuesday. The decline following the Fed’s announcement surprised many, as lower interest rates typically support gold by reducing the possibility cost of holding non-yielding assets.
“Gold remains strong enough here and only experiences a pause after the Fed. The bullish trend remains intact with a new record inevitably, and realistically we can see $4,000 before the end of the year,” stated Bob Haberkorn, market analyst at Rjo Futures, to Reuters.
The Fed’s decision to cut rates was attributed to risks in the labor market,with Minneapolis Federal Reserve President Neel Kashkari indicating the possibility of further cuts at the next two central bank meetings. Lower rates generally benefit gold, which also serves as a safe-haven asset during times of economic uncertainty. Year-to-date, gold has increased by 40.4%.
demand for physical gold remains robust. In India,premiums have risen to a 10-month high ahead of the festive season,despite record prices. Conversely, discounts in China have widened to a five-year high. Some investors are shifting towards more affordable precious metals. “What I see is that many investors are now turning to Platinum and Silver as it is indeed more affordable than gold,” Haberkorn noted.
