Gold prices have surged to record highs, reaching $2,526.07 an ounce, driven by geopolitical tensions, uncertainties surrounding the upcoming U.S. Presidential election, and expectations of interest rate cuts. This rally has made gold one of the best-performing assets of 2024, with prices up over 20% this year.
Analysts predict that gold could climb even higher, potentially reaching between $2,600 and $2,700 by the end of the year. Amelia Xiao Fu, head of commodity markets at BOCI, emphasized the uncertainty surrounding the U.S. elections as a significant factor contributing to gold’s appeal as a safe-haven asset.
The anticipated interest rate cuts by the U.S. Federal Reserve are further enhancing gold’s attractiveness, as lower rates typically boost demand for safe-haven assets while weakening the dollar. Lina Thomas, commodities strategist at Goldman Sachs, noted that these rate cuts could draw Western capital back into the gold market, maintaining a bullish forecast of $2,700 for gold by 2025.
China’s continued interest in gold also plays a crucial role, as the country had been buying gold for its reserves for 18 consecutive months before pausing due to high prices. Analysts believe that any significant price declines could reignite Chinese buying.
The influx of investments into physically-backed gold exchange-traded funds (ETFs) has also contributed to the upward momentum, with net inflows of 8.5 metric tons recorded last week by the World Gold Council.