Due to the positive impact of the expected interest rate cut, $Gold Futures(DEC4) (GCmain.US)$ on Tuesday this week hit another record high, and this year's increase also exceeded the three major indexes of the US stock market.

Institutions point out that this Fed rate cut is more like a preventive rate cut. Gold will show relatively strong performance before the rate cut, there may be fluctuations after the first rate cut, but as rate cuts become normal, the upward channel for gold is expected to continue opening.

The discount rate meeting minutes provide another significant signal for rate cut trades.

On August 27, Eastern Time, the U.S. Federal Reserve's website released the latest minutes of the U.S. Federal Reserve's discount rate meeting, which showed that the boards of directors of the Chicago Fed and New York Fed voted in July in favor of a 25 basis point cut in the discount rate.

For a long time, the minutes of the discount rate meeting have provided clues and signals about the future direction of the Federal Reserve's monetary policy.

The discount window meeting minutes offer insights into the potential direction of monetary policy. With easing inflation pressures and rising risks in the job market, current market expectations indicate that the Fed is almost certain to lower its rate target at the September policy meeting. According to CME's "Fed Watch": there is a 63% probability of a 25 basis point rate cut by the Fed in September, and a 37% probability of a 50 basis point cut.

Sand River, the fund manager of Tianhong Shanghai Gold ETF Linked Fund, believes that "this rate cut by the Federal Reserve is closer to preventive rate cuts. Gold is expected to perform relatively strong before the rate cut, and there may be fluctuations in gold after the first rate cut. However, once rate cuts become normal, the upward channel for gold is expected to continue opening."

International politics, US debt and economic issues may continue to drive gold prices higher.

According to data from Bank of America's Global Research Division, gold ETFs attracted the largest inflow of funds in four weeks last week, attracting $1.1 billion. However, the fund has actually experienced an outflow of $2.5 billion so far this year, indicating that the driving force behind the rise in gold comes from sources outside of traditional fund flows.

Central banks, especially those in developing countries, have been purchasing gold at a record pace. Data from the World Gold Council shows that central banks purchased 290 tons of gold in just the first quarter, surpassing the previous record in the first quarter of 2023, and is expected to easily exceed 1,000 tons of gold purchases by central banks in 2024.

The outstanding performance of this precious metal can be attributed to its unique position as a real asset, and its lowest correlation with stocks, making it a safe-haven asset that can withstand market volatility and inflation. Tom Bruni, director of market research at StockTwits, stated: "We see gold being used as a hedge against uncertainty." Bank of America also emphasized that the recent rise in gold is different from previous rises in this century, indicating future bullish potential.

In terms of the political situation, the outcome of the US presidential election in November this year may intensify the geopolitical instability, especially if a Republican is elected as president. Therefore, in the foreseeable future, the above-mentioned favorable factors are expected to continue to exist, and official institutions still have sufficient reasons to increase their gold reserves.

John McCluskey, CEO of Alamos Gold, lists international political turmoil and unrest, as well as US debt issues and economic strength, as long-term factors driving gold prices to new highs:

"In the past few months, US debt has grown exponentially, now exceeding $35 trillion," he added. "Coupled with the Fed's expected interest rate cuts, the upcoming US elections, and increasing concerns about the US economy, these factors could further increase the potential upside for gold."

"I have publicly predicted that the price of gold will reach $2650 per ounce by the end of this year," said McCluskey, who has more than 35 years of experience in the gold mining industry.

How to seize the opportunity of rising gold prices? As gold ETF trading is convenient, liquid, and available for online trading during the trading session, investors can capture the opportunity of rising gold prices by investing in ETFs.

In fact, gold ETFs are one of this year's investment themes. From the perspective of the cumulative gains and losses from the beginning of the year to the close of July 29th, mainstream gold ETFs have risen by more than 15%, leading the 14.54% increase in the $gold main contract (2412) (GCmain.US)$.

And the specific differences between different gold ETFs can be referred to the following content:

From the beginning of the year to date, as of the closing of August 28th U.S. Eastern Time, $SPDR Gold ETF (GLD.US)$Please use your Futubull account to access the feature.$Gold Trust Ishares (IAU.US)$ Mainstream gold ETFs have risen more than 21%, outperforming the 17.24% increase. Meanwhile, leveraged ETFs $S&P 500 Index (.SPX.US)$ such as ProShares Ultra Gold ETF (UGL.US) $ProShares Ultra Gold (UGL.US)$ Bank of America Chief Investment Strategist Michael Hartnett has stated that a potential interest rate cut by the Federal Reserve could trigger new inflation, which would be bullish for gold prices.

The bank believes that the following potential gold ETFs are worth considering: $ISHARES GOLD TRUST MICRO (IAUM.US)$ and $Spdr Gold Minishares Trust (GLDM.US)$ , Hartnett called it "top-level".

Editor/Jeffy