On Friday, gold prices stayed close to their record highs, buoyed by expectations of a potential rate cut by the Federal Reserve and ongoing geopolitical uncertainty.
Current Gold Prices
- Spot Gold: Up 0.1% to $2,523.59 per ounce
- US Gold Futures: Down 0.1% to $2,556.70 per ounce
Spot gold remains near its August 20 peak of $2,531.60 and has seen a rise of over 3% this month. Despite a minor dip in futures, the overall trend reflects strong performance.
Geopolitical and Economic Factors
In the Middle East, ceasefire talks between Israel and Hamas are still underway without significant progress. This persistent uncertainty continues to support gold’s appeal as a safe-haven asset.
In the US, traders are speculating on future Federal Reserve actions with a 67% chance of a 25-basis-point rate cut and a 33% chance of a 50-basis-point cut, as indicated by CME FedWatch. Lower interest rates generally enhance gold’s attractiveness since it does not yield interest, making it a more appealing investment during times of reduced returns on other assets.
Market Projections
Ricardo Evangelista, a senior analyst at ActivTrades, projects that gold prices could approach $3,000 by the end of the year. This forecast is based on expectations of a dovish Fed policy, increased safe-haven demand, and central bank purchases.
A soft inflation report, which could lead to lower Treasury yields and a weaker dollar, might push gold prices towards new highs near $2,600.
Physical Market Insights
On the physical market front, discounts on gold in India have widened to a six-week high. The higher prices have dampened demand, and new Chinese import quotas have not significantly boosted purchases.
Other Precious Metals
- Spot Silver: Up 0.3% to $29.53 per ounce
- Platinum: Gained 0.2% to $939.36 per ounce
- Palladium: Increased 0.2% to $982.00 per ounce, up 6% this month
The rise in platinum and palladium prices reflects broader trends in the precious metals market, with palladium seeing a notable 6% increase this month.
Investors will be closely watching upcoming US Personal Consumption Expenditures (PCE) data at 12:30 GMT for further clues on potential future rate changes and their impact on precious metals.
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