24K99 News Bank of Australia and New Zealand (ANZ) analysts said that the market's expectations that the Federal Reserve will cut interest rates sharply this week are increasing, supporting the price of gold. At noon in Asian trading on Wednesday (September 18), the price of gold was 2,569 US dollars awaiting resolution. Analysts said investors should pay attention to the overall interest rate trend. Whether interest rates are cut by 25 basis points or 50 basis points this week, interest rates will be cut further in 2025, and the price of gold will rise by 2,900 US dollars by the end of next year.
ANZ commodity strategist Soni Kumari (Soni Kumari) and senior commodity strategist Daniel Hynes (Daniel Hynes) said in the latest gold report that with the Federal Reserve preparing to lower interest rates, the price of gold broke through the technical level of 2,550 US dollars per ounce and should continue to attract the attention of bullish investors.
Analysts expect the price of gold to rise to $2,900 per ounce by the end of 2025, driven by a recovery in investment demand, which was a disappointing support in the first half of 2024.
(Source: Kitco)
“In the upcoming easing cycle, lower real interest rates and a weaker dollar are likely to strengthen their inverse relationship with gold. With those who hold goldOpportunity costsDecline, which will stimulate investment demand. We expect strategic investment in gold to recover and drive up prices,” analysts said.
These remarks come at a time when the market expects the Federal Reserve to cut interest rates sharply on Wednesday.
According to the Chicago Mercantile Exchange (CME) Fed Watch tool, the market expects a 65% chance of cutting interest rates by 50 basis points.
However, many analysts pointed out that these expectations may be too aggressive. Most economists forecast interest rate cuts of 25 basis points and send dovish signals that interest rates will be cut further by 2025.
Kumari and Hines emphasized that investors should focus on overall interest rate trends rather than a single rate cut.
Analysts said, “Interest rate cuts of 100 basis points may result in a net inflow of 200-250 tons of gold into exchange-traded funds (ETFs) in the next few months. It is estimated that cutting interest rates by 200 basis points during this cycle may increase gold inflows by 500 tons.”
In addition to impending interest rate cuts, ANZ is still optimistic about gold as central banks continue to increase their investment in gold. Analysts said they do not expect a rise in gold prices to stop the central bank from buying gold.
They said, “We have raised the central bank's purchase expectations to 950 tons in 2024 and 850 tons in 2025. These purchases are lower than in the past two years, but they are still relatively high.”
However, ANZ also warned investors that the gold market may experience some fluctuations in the short term.
“Although strategic investment in ETFs may be a structural driver driving up the price of gold, speculative positions seem to be too high, bears have almost been filled, and bulls are close to 2020 levels. “Overcrowded positions may put pressure on the price of gold in the short term,” they explained.
Despite these short-term risks, strategists note that gold remains strong.
“As long as the price remains above $2,550 per ounce, we expect the price to rise to the $2640-2650 per ounce range soon. However, if the price falls below $2,540/oz, it indicates that this breakout is a false signal. In this case, after the recent price increase, a technical sell-off may occur in a wave of profit recovery, and the price may fall back to the next oneSupport level$2,460 per ounce,” the analyst concluded.