(Reuters) – Goldman Sachs reiterated its bullish view on gold prices on Monday, citing central bank demand and the U.S. Federal Reserve’s upcoming rate cut at its policy meeting this week.
Gold prices rose to a record high of $2,589.6 an ounce on Monday, supported by a weaker dollar and the prospect of a major Fed rate cut.
Markets are currently pricing in a 33% chance of a 25 basis point U.S. rate cut at the Fed’s September 17-18 meeting, and a 67% chance of a 50 basis point cut, the FedWatch tool showed from CME.
“While we see a tactical downside to gold prices under our economists’ base case of a 25 basis point Fed rate cut on Wednesday, we reiterate our long gold trading recommendation and price target of $2,700/toz by early 2025,” the investment bank said. remark.
Goldman Sachs noted that while structurally higher central bank demand has reset the relationship at the price level, changes in interest rates continue to drive gold price swings.
It also indicated that exchange-traded funds backed by physical gold continually rise as the Federal Reserve’s policy rate falls.
