Spot gold strengthened more than $20 in the short term, rising to a high of $2,583.36 per ounce, hitting a new historical high. Traders have raised the possibility of a 50 basis point rate cut by the Federal Reserve next week from 14% yesterday to 41%. During the day, former New York Fed Chairman Dudley said, "There are sufficient reasons for a 50 basis point rate cut."
On Friday (September 13th) during the New York session, spot gold strengthened more than $20 in the short term, rising to a high of $2,583.36 per ounce, hitting a new historical high.
As of the time of writing, the gold price has slightly fallen to $2,577 per ounce, with a 3.2% increase for the week and a close to 25% increase for the year. Spot silver has risen more than 2.8% during the day, breaking through the key level of $30 per ounce, with a nearly 10% increase for the week.
Analysts say that traders have increased the possibility of a 50 basis point rate cut by the Federal Reserve next week from 14% yesterday to 41%. Some media believe that the decision between a 25 basis point cut and a 50 basis point cut has become a "coin flip" (close to 50-50).
As a result of this news, the stock market, bond prices, and commodities have also risen. Analysis suggests that this is because former New York Fed Chairman Dudley said, "There are sufficient reasons for a 50 basis point rate cut."
Analysts at Deutsche Bank wrote in their report, "The gap between 25 and 50 basis points may be closer than expected, and the dot plot will be the most eye-catching part of the Fed's guidance next week, along with Chairman Powell's post-meeting press conference."
Deutsche Bank analysts expect the forward guidance from the central bank to be overall dovish. Meanwhile, officials from the Bank of Japan and the European Central Bank have made some relatively hawkish comments, pushing up the euro and the yen while exerting pressure on the US dollar.
Zaner Metals Vice President and Senior Metal Strategist Peter A. Grant said that if the follow-up data in the United States shows risks to economic growth and a weak labor market, the possibility of the Federal Reserve cutting interest rates by 50 basis points in November or December will increase, which will provide more impetus for the gold price.
Citi expects that due to the expectation of interest rate cuts in the United States, strong demand for ETFs, and other factors, the gold price could reach $2,600 by the end of 2024 and $3,000 by mid-2025. The World Gold Council stated last week that global physical gold ETFs saw a net inflow of $2.1 billion in August, marking the fourth consecutive month of inflows.
Chris Weston, Research Director at Pepperstone Group Ltd., said, "Currently, gold is being used more as a hedging tool in investment portfolios." Fund managers may view gold as a place to store funds in case of a deterioration in the US economy.
In addition, the conflicts in the Middle East and between Russia and Ukraine have also brought strong safe-haven demand, and there is growing interest from retail investors. Daniel Pavilonis, Senior Market Strategist at RJO Futures, said that reaching $3,000 is possible.
However, Pavilonis believes that this situation may be influenced by political turmoil after the US elections.
Editor/Somer