Gold Prices Hit Another All-Time High... "Forecasted to Reach $3000 Next Year"

Decline in US Dollar Value Amid September Interest Rate Cut Outlook
US Election and Middle East Uncertainty Also Drive Gold Investment
Citigroup "Gold Price to Reach $3000 Next Year"

The price of gold is breaking record highs day after day. With the first interest rate cut by the U.S. Federal Reserve (Fed) in September highly likely, and Fed Chair Jerome Powell expected to deliver a pivot message in his Jackson Hole speech on the 23rd (local time), demand for gold investment is expanding. On Wall Street, there are even forecasts that gold prices will surpass $3,000 per ounce next year.

On the 21st, as of 9:30 a.m. Eastern Time, gold was trading at $2,506.2 per ounce, down 0.31% from the previous day. The price of gold briefly reached $2,531 per ounce the day before, setting a new all-time high. Institutional investors and hedge funds have been betting on rising gold prices, pushing it up more than 20% since the beginning of the year.

As investors’ gold buying momentum spreads, holdings of gold exchange-traded funds (ETFs) have increased by 904,000 tons since May, according to the World Gold Council. The scale of gold investment has grown by $7.3 billion. The net gold buying trend has continued for 7 out of the last 8 weeks.

The rise in gold prices is analyzed to be due to expectations of a Fed rate cut in September and a decline in the value of the U.S. dollar. Speculation that Chair Powell may deliver a dovish (monetary easing-favoring) message at the Jackson Hole meeting is stimulating gold buying sentiment. Accordingly, the dollar index, which measures the value of the U.S. dollar against the currencies of six major countries, is currently at around 101.4, marking its lowest level this year. Concerns over escalation in the Middle East, growing uncertainty ahead of the U.S. presidential election, and the expanding U.S. fiscal deficit are also leading to increased demand for gold as a safe-haven asset.

Additionally, increased gold investment by major central banks has driven gold prices higher. According to Metal Focus, net gold purchases by central banks worldwide in the first half of this year amounted to 483.3 tons, equivalent to 40,000 gold bars.

John Reade, Chief Market Strategist at the World Gold Council, said, "Western investors are beginning to return to the gold market," adding, "This is the money that is moving gold prices quickly."

Market observers expect the gold price rally to continue, with prices reaching $2,700 per ounce this year and surpassing $3,000 next year.

Sabrin Chowdhury, Senior Commodity Analyst at BMI, analyzed, "2024 is an election year and uncertainty is peaking due to recent Russian attacks in Ukraine and escalating tensions in the Middle East." She added, "Gold is showing strength amid uncertainty and will set multiple new highs in 2024," forecasting, "If the Fed cuts rates next month, gold could reach $2,700 per ounce."

Citigroup predicts that gold investment sentiment will persist for the next 3 to 6 months, expecting gold prices to reach $2,550 per ounce in the fourth quarter and surpass $3,000 by mid-2025.