Gold is breaking records again: what are the reasons for the growth
7 October 10:35
Gold prices have risen to an all-time high amid political uncertainty in the United States and almost certain interest rate cuts by the Federal Reserve. Its price has risen by about 50% since the beginning of the year and is approaching $4,000 per ounce for the first time in history. This was reported by "Komersant Ukrainian" with reference to Reuters.
As of 06:26 GMT, spot gold rose by 0.1% to $3,962.63 per ounce, having previously reached a new record of $3,977.19.
US gold futures for December delivery added 0.2% to $3,985.30 per ounce.
Reasons for the growth
The market was supported by expectations of a Fed rate cut in October, despite statements by some members of the regulator about caution.
According to the CME FedWatch tool, the probability of a rate cut in October is 93%, and in December – 82%.
“The probability of a rate cut in October and December exceeds 80%, which supports gold prices. The situation with the government shutdown in the United States is also affecting gold prices, as Congress has not yet reached a compromise,” explained Calvin Wong, senior analyst at OANDA.
Jeff Schmid, President of the Federal Reserve Bank of Kansas City, said that he was not inclined to cut rates further, as the priority remains to fight inflation, not the short-term weakness of the labor market.
Gold is back on trend
Gold traditionally grows in times of economic crises and low interest rates, as it does not generate yield, but is perceived as a safe haven for capital.
Since the beginning of the year, the gold price has jumped by 51%.
The main factors of growth:
- active purchases by central banks;
- high demand for gold-backed exchange-traded funds;
- a weaker US dollar;
- interest of retail investors seeking protection from geopolitical risks.
Analysts’ forecasts
Investment bank Goldman Sachs has raised its forecast for the price of gold to $4,900 per ounce by December 2026 (previously $4,300), expecting further growth in demand from Western ETFs and central banks.
China continues to actively increase its gold reserves – in September, this was the eleventh consecutive month of growth, according to the People’s Bank of China.
Other precious metals
- Silver remained stable at $48.49 per ounce.
- Platinum fell by 0.1% to $1,624.11.
- Palladium added 0.8% to $1,329.63.
