Gold prices are expected to hit new highs ahead of the Fed’s interest rate decision

Gold prices continue to hit new highs, and analysts expect more highs to come as the Federal Reserve meeting approaches, with some analysts predicting that gold prices will reach $3,000 an ounce next year as the Fed meeting approaches.

Spot Gold Gold held steady at its all-time high of $2,508.14 an ounce hit in the previous session, according to FactSet, while US Gold Futures Gold rose 0.16% to a new record of $2,540.8 per ounce during Asian trading on Monday, extending Friday’s gains.

“2024 is a year that gold is expected to set multiple new highs,” said Sabrin Chowdhury, head of commodity analysis at BMI, noting the metal’s appeal as a safe-haven asset.

“Gold thrives in uncertainty … (and) uncertainty is reaching its peak,” she added, referring to 2024 being an election year and Ukraine’s Recent invasion of Russia and growing tensions in the Middle East.

Israel and Iran appear to be on the verge of direct conflict as Iran vows to retaliate Earlier this month, Hamas political leader Ismail Haniyeh was assassinated in TehranIsrael has put its military on high alert. The United States sent an aircraft carrier strike group and missile submarines Head to the area to support the defense of their allies.

Another factor driving gold prices higher is the increased likelihood of a rate cut by the Federal Reserve in September. The July Fed meeting has boosted investor confidence in a rate cut next month. “On the table.”

“Once the Fed starts cutting rates, most likely next month, gold prices could reach $2,700 an ounce,” BMI analysts said. Other analysts share similar bullish sentiments.

Lower interest rates reduce the opportunity cost of buying gold, making it more attractive relative to interest-bearing assets such as U.S. Treasuries, which can compete with gold as a safe-haven asset.

Lower interest rates also put pressure on the dollar, making dollar-denominated gold attractive to holders of other currencies.

Gold investor sentiment is expected to rise over the next three to six months, Citi analysts said in a report on Monday.

The bank added that they expect a medium-term gold price target of $3,000 per ounce by 2025, with an average price forecast of $2,550 per ounce in the fourth quarter.

Traders will also be watching this week’s annual economic policy symposium at Jackson Hole, which could provide more clarity on the rate outlook, with Federal Reserve Chairman Jerome Powell set to speak.