Bullish Run for Gold? – Investors have been closely watching gold’s price trends over the past several months, and for good reason.
The precious metal has experienced an impressive bull run since the start of 2024. Its value has reached new record highs multiple times this year.
The trend began in early March when gold prices surged to $2,160 per ounce. This marked an 8% increase compared to the previous record in December 2023. That record was quickly surpassed with peaks in April, May, August, and most recently, on September 16, when the price climbed above $2,584 per ounce. With this latest milestone, gold is up an astounding 25% since the beginning of the year.
Upcoming FOMC Meeting and Investor Sentiment
As gold and silver rallies pause, all eyes are on the upcoming Federal Open Market Committee (FOMC) meeting. Goldman Sachs released a note suggesting that a 25-basis-point cut could present a buying opportunity for gold if prices pull back.
Goldman Sachs maintains its price target of $2,700 per ounce for gold. However, the firm warns investors to be cautious about the possibility of a 25-basis-point cut during today’s scheduled FOMC meeting.
Market Speculation on Rate Cuts
Last week, gold seemed to price in the possibility of a 50-basis-point rate cut. Traders reversed course on speculation regarding the Fed’s future policy. Earlier in the week, traders anticipated an 85% chance of a quarter-point cut. However, this expectation later dropped as speculation began to suggest the Fed was leaning toward a half-point cut.
Shifting Economic Landscape
The economic landscape that has allowed gold to thrive is changing quickly. Inflation, a primary concern for both policymakers and investors, has cooled dramatically compared to recent years.
Additionally, the employment market is slowing down. As a result, the Federal Reserve is expected to implement its first interest rate cut of the year this week. This decision could have significant implications for various asset classes, including gold.
Bullish Run for Gold? – What to Expect from the Rate Cut
What can we expect to happen to gold prices when the Fed finally cuts rates? The CME FedWatch tool, which uses bond-market data to gauge the anticipated size of rate cuts, indicates a 61% chance of a larger 50-basis-point cut. There’s also a 39% chance of a smaller reduction.
The FOMC is set to meet at 2 p.m. EDT today, and investors are eager for updates.
Bullish Run for Gold? – Current Market Conditions
As the meeting approaches, gold and silver prices have traded relatively flat over the past 24 hours. Gold remains steady around the $2,575 range, while silver hovers at $30.55 per ounce. Investors will be keen to see how the Fed’s decision impacts these precious metals in the coming days.
