PUBLISHED: 22 Aug 2024 at 06:01
The price of gold is experiencing a significant increase, reaching a new record high of US$2,531 an ounce as investors eagerly await insights from the Federal Reserve regarding potential interest rate cuts during its upcoming September meeting. This upward momentum is attributed to various factors, including rising geopolitical tensions in the Middle East and ongoing conflicts in Ukraine.
Market analysts indicate that the safe-haven appeal of gold is drawing buyers amid these uncertainties. With Federal Reserve Chair Jerome Powell set to address the economic outlook at the annual Jackson Hole conference on Friday, expectations are building that he may propose a strategy for interest rate reductions beginning in September.
As of Wednesday around noon, spot gold increased by 0.15% to $2,517 per ounce, while US gold futures climbed 0.2% to $2,555.20. This precious metal has gained approximately $460 or 22% this year alone, with analysts suggesting that geopolitical tensions and impending US presidential election uncertainties may propel gold prices even higher.
Predictions indicate a 75% likelihood of the Federal Reserve lowering interest rates by 25 basis points and a 25% chance of a more substantial cut of 50 basis points, both of which could significantly influence gold market dynamics.
Any indication from Chair Powell that the anticipated interest rate cut will exceed market expectations could further boost gold prices. Meanwhile, the intensifying conflicts in the Middle East, particularly Israel’s ongoing military actions, hint at the potential failure of ceasefire negotiations.
Analysis from Hua Seng Heng suggests that gold prices may find support at $2,460 and $2,430, while resistance levels are estimated at $2,520 and $2,540. In the domestic market, support levels are projected at 40,800 and 40,600 baht, with resistance seen at 41,400 and 41,600 baht.
Market insights note that despite some minor profit-taking, gold prices are likely to remain above $2,500, even dipping to $2,486 before rebounding to $2,504 earlier this week.
Spot gold surged past $2,500 per ounce last Friday, bolstered by optimism surrounding potential US rate cuts, robust central bank purchases, and a heightened demand for safe-haven assets against a backdrop of escalating Middle Eastern tensions. As the US dollar hovers near a seven-month low, dollar-denominated gold stands to benefit significantly. Furthermore, holdings of the largest gold-backed exchange-traded fund have surged to a seven-month high of 859 tonnes on Monday, underscoring strong investor interest in gold.
