Goldman Sachs Maintains Optimistic Outlook on Gold Prices Amid Fed Rate-Cut Expectations, Reports Reuters

Goldman Sachs has reaffirmed its positive outlook on gold prices, highlighting demand from central banks and the anticipated interest rate cut from the U.S. Federal Reserve at its upcoming policy meeting this week.

On Monday, gold prices reached a record high of $2,589.6 per ounce, buoyed by a weaker dollar and the possibility of a significant rate reduction by the Fed.

Current market expectations indicate a 33% probability of a 25-basis-point rate cut at the Fed’s meeting scheduled for September 17-18, and a 67% probability of a 50-basis-point cut, as reported by the CME FedWatch tool.

Goldman Sachs stated, “While we anticipate some short-term downside to gold prices based on our economists’ baseline scenario of a 25-basis-point Fed cut this Wednesday, we maintain our long-term trading recommendation for gold and have set a price target of $2,700 per ounce by early 2025.”

The investment bank also noted that the increasing demand from central banks is altering the dynamics of gold pricing, while fluctuations in interest rates continue to influence price movements. Additionally, it pointed out that the growth of exchange-traded funds backed by physical gold is consistently rising in response to the Federal Reserve’s decreasing policy rate.