Gold prices rose to an all-time high at $2,589.6 an ounce on Monday, supported by a weaker dollar and the prospect of a big rate reduction by the Fed.
Markets are currently pricing in a 33% chance of a 25-basis-point U.S. rate cut at the Fed’s Sept. 17-18 meeting, and a 67% chance of a 50-bps cut, the CME FedWatch tool showed.
“While we see some tactical downside to gold prices under our economists’ base case of a 25bp Fed cut on Wednesday, we reiterate our long gold trading recommendation and our price target of $2,700/toz by early 2025,” the investment bank said in a note.
Goldman Sachs noted that while a structurally higher demand from central banks has reset the relationship at the price level, changes in interest rates continue to drive fluctuations in gold prices.
It also indicated that exchange-traded funds backed by physical gold are consistently rising as the Federal Reserve’s policy rate diminishes.
Source: Economy - investing.com
