Gold (XAU/USD) hit a new all-time high on Friday. Commerzbank commodity analyst Carsten Fritsch raised his year-end gold price forecast to $2,500 per troy ounce from $2,300, noting that upcoming interest rate cuts by the Federal Reserve will continue to support prices.
Gold outlook brightens as Fed prepares to cut interest rates
“US inflation fell below 3% in July. However, core inflation, which excludes energy and food, was still slightly higher at 3.2%. This would be enough for the Fed to cut interest rates for the first time in September, but it is far from enough for a 50 basis point cut. Fed funds futures are currently pricing in just under 100 basis points of cuts by the end of the year, which is still a significant amount. We therefore expect to reach and surpass all-time highs in the not-too-distant future.”
“With clear signs of significant interest rate cuts from the Fed, we have raised our year-end gold price forecast to $2,500 per ounce (previously $2,300). Following the three expected rate cuts by the end of the year, we now see the possibility of three more cuts in the first half of 2025, for a total of two cuts more than previously expected.”
“We therefore expect gold prices to rise further to $2,600 by the middle of next year. By the end of 2025, gold prices could fall to $2,550 (previously $2,200), taking into account speculation of a resurgence in inflation and associated interest rate hikes the following year.”
