Goldman Sachs reiterated its bullish outlook for gold prices on Monday, citing central bank demand and the U.S. Federal Reserve’s impending interest rate cut at its policy meeting this week.
Gold prices hit an all-time high of $2,589.6 an ounce on Monday, supported by a weaker dollar and the prospect of a significant interest rate cut by the U.S. Federal Reserve.
Markets are currently pricing in a 33% chance of a 25 basis point rate cut at the Fed’s September 17-18 meeting, and a 67% chance of a 50 basis point cut, according to the CME’s FedWatch tool.
“While we see a tactical decline in gold prices under our economists’ base case of a 25 basis point Fed cut on Wednesday, we reiterate our buy gold recommendation and price target of $2,700/toz by early 2025,” the investment bank said in a note.
Goldman Sachs noted that while structurally higher demand from central banks has restored the price relationship, interest rate changes continue to drive gold prices.
She also noted that exchange-traded funds backed by physical gold have been steadily increasing as the Federal Reserve’s policy rate declines.
