Analysts: further Gold Price Increase Possible

Ricardo Evangelista – Senior Analyst, ActivTrades

Gold is trading significantly higher today, nearing its highest level since April, when the precious metal reached an all-time high of $3,500.

The increase is primarily driven by expectations of a Fed rate cut, which would weigh on the dollar and boost demand for gold due to the inverse correlation between the two assets.

Gold Price Likely to Benefit from Rate Cuts

Markets are not only pricing in a 25 basis point rate cut in September but are also increasingly anticipating another similar move before year-end. This dovish outlook continues to pressure the Greenback and further supports the gold price.

Demand for safe-haven assets also plays a role. The military escalation in the Gaza Strip, the diminishing prospects for peace between Russia and Ukraine, as well as political tensions in the US – where the Trump administration’s dismissal of Governor Lisa Cook raised concerns about the Fed’s independence – are fueling investor demand for gold. Against this backdrop, a further increase in the precious metal’s price could occur.

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