Gold resumed its upward trajectory, reaching a new record high as markets’ participants eagerly await Federal Reserve Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium. The precious metal reached an intraday peak of $2,528.72 per ounce, extending its impressive year-to-date gain to over 22%. With Powell’s address on Friday expected to offer insights into the Federal Reserve’s monetary policy direction, particularly concerning anticipated interest rate cuts, traders are positioning themselves accordingly.
Ole Hansen, head of commodity strategy at Saxo Bank, commented on the current market dynamics: “Gold remains in record-setting mode ahead of Powell’s Jackson Hole speech. With the dollar and yields not providing much inspiration today, the main driver is the current positive momentum and limited selling appetite basically leaving the path of least resistance to the upside.”
The potential for further rate cuts is a key factor propelling gold prices higher. As a non-interest-bearing asset, gold benefits from lower interest rates, which reduce the opportunity cost of holding the metal. In addition to the Federal Reserve’s policy outlook, traders are also keeping a close eye on this week’s U.S. economic data, particularly Thursday’s jobless claims figures, which could further influence the Fed’s strategy.
Beyond domestic monetary policy, gold’s rally has been bolstered by continued strong demand from central banks and investors seeking safe-haven assets amidst geopolitical uncertainties, including ongoing conflicts in the Middle East and Ukraine. Physical gold purchases in the over-the-counter market have also remained robust, adding to the metal’s upward momentum.
According to Carsten Fritsch, a commodity analyst at Commerzbank AG, gold’s ascent is likely to continue into 2025. “We expect the gold price to continue to rise in the first half of 2025 due to further Fed interest rate cuts, a U.S. inflation rate that remains above target, and a weaker U.S. dollar,” Fritsch wrote in a report. However, he cautioned that the bank doesn’t expect significant additional gains in the near term.
Wayne Gordon, a strategist at UBS Global Wealth Management, shares a bullish outlook for gold, predicting that prices could approach $2,700 an ounce by mid-2025. This projection aligns with the broader market sentiment that sees gold as a reliable hedge against economic uncertainty and inflationary pressures.
Nevertheless, there are signs that gold’s remarkable rally might be starting to weigh on demand, particularly in China, the world’s largest consumer of the metal. Recent data revealed that China’s gold imports fell to their lowest level since May 2022, suggesting that some buyers may be holding back due to the high prices.
As of 1:35 p.m. in London, spot gold was trading at $2,525.13 an ounce, reflecting a 0.8% increase for the day. Other precious metals, including palladium, platinum, and silver, also posted gains. Meanwhile, the Bloomberg Dollar Spot Index and U.S. 10-year Treasury yields remained relatively unchanged.
As anticipation in the markets builds for Jerome Powell’s Jackson Hole address, the record high value of gold underscores the metal’s enduring appeal in times of economic uncertainty and speculation over future Fed rate cuts. Investors and traders alike will be scrutinizing every word from the Fed Chair for any hints of future monetary easing, which could further fuel gold’s upward march. Until then, the precious metal remains on a record-breaking streak, driven by a mix of economic and geopolitical factors that show no sign of abating.
