Goldman Sachs Predicts Gold Prices to Soar as Federal Reserve Prepares for Rate Cut
Goldman Sachs, the renowned investment bank, has once again expressed its bullish outlook on gold prices in a recent report. The bank cites increasing central bank demand and the upcoming interest rate cut by the U.S. Federal Reserve as key factors driving the precious metal's surge.
On Monday, gold prices reached a record high of $2,589.6 per ounce, buoyed by a weakening dollar and expectations of a substantial rate cut by the Fed. Market analysts are currently pricing in a 33% probability of a 25-basis-point rate reduction at the Fed's policy meeting on September 17-18, with a 67% chance of a more aggressive 50-bps cut, as indicated by the CME FedWatch tool.
Despite the potential for a slight pullback in gold prices following a 25-bp Fed cut, Goldman Sachs maintains its long gold trading recommendation and sets a price target of $2,700 per troy ounce by early 2025.
The investment bank highlights the significant impact of central bank demand on gold prices, emphasizing the role of interest rate changes in driving price fluctuations. Additionally, Goldman Sachs notes the increasing popularity of exchange-traded funds backed by physical gold as the Federal Reserve's policy rate declines.
In conclusion, investors should take note of Goldman Sachs' positive outlook on gold prices, driven by central bank demand and the anticipated rate cut by the Federal Reserve. By considering these factors and staying informed on market developments, individuals can make informed decisions to potentially benefit from the expected rise in gold prices.