Gold price breaks historical maximum amid expectations of Fed rate cut
Kyiv • UNN
On September 16, gold reached a new record of $3689.27 per ounce, as investors anticipate a reduction in US Federal Reserve interest rates. This weakens the dollar and makes gold more attractive for investment, with forecasts of further growth to $3700.
Gold prices once again broke a historical record on September 16, as prices for it rose. Investors are betting that the US Federal Reserve will cut interest rates this week, which means a weaker dollar and more favorable conditions for gold. This was reported by Reuters, writes UNN.
Details
On Tuesday, gold rose to a new record of $3689.27 per ounce, before retreating slightly to $3683.28. US futures remained almost unchanged at $3720.10 per ounce.
The Reuters report states that the dollar is weakening: it is currently near multi-month lows. When the dollar falls, gold becomes more accessible to investors with other currencies.
Rates may be cut: markets are almost certain that the Fed will cut the benchmark rate by 0.25% this week, and some even allow for an immediate 0.5% cut. If this happens, gold will benefit even more, because bullion does not yield interest, and at low rates, it is more profitable to hold it.
Analysts say that if the Fed confirms market expectations, gold could go even higher – up to $3700. But if the central bank speaks more hawkishly, a sharp pullback is possible.
Sentiment is very optimistic... markets are buying into rate cuts, preparing for this FOMC decision. The outlook for gold remains strong in the short and medium term.
Even Donald Trump intervened: he called on Fed Chairman Jerome Powell to "cut rates harder." Meanwhile, a US court denied Trump's attempt to fire Fed board member Lisa Cook – this also became the news of the day, as it shows the tension around the central bank's independence.
Demand for gold is also confirmed by funds: the largest gold ETF SPDR Gold Trust reported an increase in assets from 974.8 to 976.8 tons in one day.
However, prices for other metals behaved more calmly:
- silver – minus 0.2%, $42.63 per ounce;
- platinum – unchanged, $1401.65;
- palladium – also stable, $1183.76.
Recall
Despite the previous increase in the value of monetary gold as a method of saving money, its popularity as a jewelry metal has significantly decreased. As noted in a comment for UNN by financial expert Olena Sosedka, this was most reflected in key markets - India and China.
Gold prices in the global market have become so high that it has reduced the popularity of buying gold jewelry. This was most reflected in such key markets as India and China, but the global decline in demand is felt all over the world. Due to the rising price, former fans of gold jewelry are increasingly preferring other precious metals. Instead, gold is more often considered as a way to preserve capital in conditions of economic instability and high inflation. And not as an item of everyday use
In addition, analysts at Goldman Sachs, one of the largest and most influential investment banks in the world, predict that if the dollar continues to fall, the value of gold will reach $3,700 per troy ounce by the end of 2025.
On September 9, world gold prices once again rose to a record level, exceeding $3650 per ounce.