Gold fetches record price as central banks stockpile ahead of expected interest-rate cut
- Citigroup says the metal could be headed for US$3,000 per ounce next year after hitting US$2,531.75 overnight
A rush for gold shows no signs of letting up, as the price of the bullion hit an all-time high overnight on bets that the Federal Reserve is set to deliver its first interest-rate cut in four years, leading global central banks to amass more of the precious metal to diversify their assets.
The spot price touched a record of US$2,531.75 per ounce overnight, marking a 22 per cent gain this year, and traded at about US$2,510 an ounce on Wednesday. UBS Global Wealth Management expects the metal to approach US$2,700 by the middle of 2025, while Citigroup is even more optimistic, forecasting a rise to US$3,000 in the same time frame.
Gold’s ascent comes in the run-up to the Jackson Hole Symposium on Friday, during which Fed chair Jerome Powell is expected to give clues about anticipated policy easing.
Amid cooling inflation, a cut during the Fed’s September 18 meeting now seems like a certainty, with the market pricing in more than a 25-basis-point reduction, according to the CME Group.
An environment with low borrowing costs burnishes the appeal of gold, which generates no rate-bearing returns.
“We remain bullish on gold and continue to include a meaningful weighting of it in our strategic asset allocation model,” said Gary Dugan, CEO of The Global CIO Office. “The trend has shown underlying strength throughout the year. Expectations that the Federal Reserve will cut rates at the next two meetings, coupled with a slight dip in the dollar, have contributed to gold’s recent momentum.”
