Gold Bulls Target Previously Dismissed $3,000/oz Milestone, Reports Reuters

By Anushree Ashish Mukherjee and Anjana Anil

Gold market enthusiasts are capitalizing on soaring bullion prices, with targets of reaching $3,000 per ounce becoming more prominent. This trend is largely fueled by monetary easing from major central banks and a heated U.S. presidential election campaign.

On Friday, gold hit a historic peak of $2,572.81 per ounce and is on course for its best annual performance since 2020, having increased by over 24%. This surge is attributed to heightened safe-haven demand amid geopolitical and economic uncertainties, alongside significant purchases by central banks.

Analysts from Citi Research predict that gold could hit $3,000 per ounce by mid-2025 and $2,600 by the end of 2024, driven by anticipated U.S. interest rate cuts, strong demand from exchange-traded funds, and continued physical demand.

The World Gold Council reported that global physically backed gold exchange-traded funds have experienced a fourth consecutive month of inflows as of August.

As the next Federal Reserve meeting approaches on September 18, markets are increasingly speculating about the potential for the first U.S. interest rate cut since 2020. Typically, lower interest rates provide support for gold, which yields no interest.

Current market assessments suggest a 55% chance of a 25-basis-point rate cut and a 45% chance of a 50-bps reduction. If economic data indicates growth risks and labor market weaknesses, the likelihood of a 50 bp cut in November or December could rise, benefitting gold prices and accelerating the timeframe for reaching $3,000, according to Peter A. Grant, vice president and senior metals strategist at Zaner Metals.

Interest rate reductions by major central banks are gaining momentum, with the European Central Bank recently delivering its second quarter-point cut of the year.

Joseph Cavatoni, a market strategist, noted that upcoming U.S. election uncertainties could further stimulate demand for gold, which is viewed as a hedge against immediate risks during times of political volatility. The presidential election on November 5 could exacerbate market fluctuations, prompting investors to seek the security of gold.

Daniel Pavilonis, a senior market strategist at RJO Futures, expressed optimism about reaching the $3,000 per ounce target, attributing potential price surges to political instability after the elections.

Investment banks and market analysts are increasingly bullish on gold, with Goldman Sachs demonstrating significant confidence in the short-term prospects for the precious metal, viewing it as a viable hedge against geopolitical and financial risks.

In a recent update, Australia’s Macquarie raised its gold price forecasts, anticipating an average cyclical peak of $2,600 per ounce in the first quarter of next year, with the potential for a spike toward $3,000.

Macquarie analysts noted that while the challenging fiscal outlooks in developed markets create a favorable environment for gold, much of this potential may already be reflected in current prices, suggesting possible cyclical challenges may arise later next year.