Russell Shor, a senior market specialist at Tradu, said this week, “Analysts foresee long-term gains for the precious metal, driven by the Federal Reserve’s preparations to cut rates, believing inflation is under control” Gold prices ticked up a bit on Thursday as expectations for a U.S. Federal Reserve rate cut in September grew. Spot gold fell slightly by 0.21% to $2,453.23 per ounce after hitting a record high of $2,483.60 the day before. U.S. gold futures also dropped a bit by 0.1%, ending at $2,457.00. Russell notes that analysts expect gold to gain long-term due to the anticipated Fed rate cuts, which should help manage inflation. He also mentioned that geopolitical tensions and increased central bank demand are adding to gold’s positive outlook for the medium to long term.
The expectation of a rate cut in September is backed by the CME FedWatch Tool, which shows a 100% chance of this happening. In a low-interest-rate environment, gold becomes more attractive since it doesn’t yield interest. Despite a rise in new unemployment claims in the U.S., the Labor Department reported no major change in the job market. The International Monetary Fund (IMF) suggested delaying any rate cuts until late 2024, creating some uncertainty in the economic outlook. Meanwhile, the European Central Bank has kept its rates steady, with President Christine Lagarde saying future rate decisions are still open.
Gold’s appeal as a safe investment is also bolstered by negative remarks from U.S. presidential candidates about China, as noted by Jim Wyckoff, a senior market analyst at Kitco Metals. This geopolitical uncertainty makes gold a more attractive investment. The World Gold Council reported that global gold exchange-traded funds saw their second month of inflows in June. In contrast, other precious metals saw declines, with spot silver falling by 0.12% to $29.93 per ounce, platinum dropping by 2.1% to $986.90, and palladium decreasing by 3.2% to $924.
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