Source: Jin10 Data
Despite the strengthening upward trend of gold prices, senior analysts warn that investors should be alert to sudden pullbacks similar to those in the past three months.
Boosted by the Federal Reserve and Trump, the price of gold hit a new historic high on Tuesday. This rise continued to Wednesday, with spot gold touching a high of $2,482.42 per ounce in Asia, accumulating more than 6% rise this month.
JPMorgan believes that this is due to increasing confidence in the Federal Reserve's interest rate cuts, which is a major bullish for gold. Gold is an interest-free asset that performs better when interest rates ultimately fall.
The bank expects the Federal Reserve to begin cutting interest rates from September, joining Wall Street's similar predictions. Prior to this, the United States made encouraging progress in its fight against inflation, with the June CPI report performing well, and overall inflation fell 0.1% month-on-month.
"Our analysts are still bullish on the gold price for the end of the year and expect it to rise to $2,500 per ounce in the fourth quarter of 2024. This is because, with the start of the Fed's interest rate cut cycle, we believe Western investors will stimulate gold demand again through futures and ETFs, thereby driving the next round of gold price increases," JPMorgan said.
The bank said that the inflow of funds into the gold market reached the highest level in eight weeks last week, totaling $10.9 billion.
At the same time, the upcoming US presidential election has also become a factor in the rise of gold prices.
Sources told the Financial Times that Trump's re-election is a major bullish factor for gold. They said Trump's tariff and tax policies could stimulate inflation and deepen the budget deficit, making gold seem more attractive in this scenario.
UBS also stated in a statement that recent political uncertainty may cause market fluctuations, making gold more attractive and amplifying its role as a safe-haven asset.
David Morrison of Trade Nation wrote on Tuesday that for now, technical indicators show that gold's uptrend is continuing to strengthen, without any signs of being overbought.
However, the senior market analyst warned: "Given the possibility of sudden plunges in gold prices, buyers may decide to be cautious. We have seen this happen several times before, most recently in April, May and June."
Editor/Lambor