Bangkok: Gold prices have experienced a notable rise, reaching a new high as expectations mount for an interest rate cut by the US Federal Reserve. Analysts predict that gold futures in New York are set to hit record levels, driven by the anticipation of a rate cut during the Federal Reserve’s upcoming September meeting.
According to Thai News Agency, December gold futures on the COMEX (Commodity Exchange) witnessed an increase of $4.80, or 0.13%, closing at $3,682.20 per ounce. Ms. Areerat Murachai, Chief Analyst at GCAP Co., Ltd. (GCAP GOLD), highlighted that the recent surge in gold prices past $3,600 was fueled by a weaker-than-expected US employment report. This development has heightened market confidence in a potential rate cut, making gold an attractive investment as it benefits from lower interest rates.
The market remains attentive to US political uncertainties, particularly President Donald Trump’s criticisms of the Federal Reserve, which have raised concerns about the central bank’s independence. Investors are closely monitoring the potential impeachment of Fed Governor Lisa Cook, as any disruption could further enhance gold’s appeal as a safe asset. Analysts at Goldman Sachs have projected that gold prices could soar to nearly $5,000 per ounce if the Fed’s independence is compromised.
The gold market continues to be supported by a weakening US dollar and declining government bond yields, which reduce the opportunity cost of holding gold. These factors, combined with ongoing geopolitical, economic, and global trade risks, contribute to a favorable outlook for gold as a medium to long-term investment.
GCAP recommends a strategy of purchasing gold during dips, particularly at the $3,555 and $3,525 levels, given the positive outlook. Market participants are keenly observing the Fed’s stance on interest rates and upcoming inflation data. Should the Fed signal a continued easing of monetary policy, gold prices are expected to challenge the resistance zone of $3,630-$3,650, potentially reaching $3,700.
Nattawut Wongyaorak, Director of Research at Globlex Securities, noted that gold prices have the potential to rise further, bolstered by weak employment data from the US and signals from Fed officials indicating imminent rate cuts. The FedWatch tool suggests that investors are anticipating three rate cuts this year, with a 90% probability of a cut in the upcoming meeting, a factor that has boosted gold prices.
Geopolitical uncertainties continue to drive investors to gold as a safe asset. The ongoing trade war, along with escalating tensions in Ukraine and the Middle East, has influenced this trend. Recent developments include Ukraine’s decision to retaliate against Russia following drone attacks on Ukrainian power plants, leaving thousands without electricity. In the Middle East, Israel’s military actions in Gaza and Houthi attacks on oil tankers have further fueled investor interest in gold as a haven.
Despite the upward momentum, profit-taking may occur, potentially leading to fluctuations in gold prices this week. Analysts suggest a price range between $3,545 and $3,650 per ounce and recommend waiting for price declines to make purchases.