Gold prices are anticipated to advance in the near future, according to a note from TD Securities. Steady central bank purchases and increasing clarity on U.S. interest rate cuts are expected to support the yellow metal. TD Securities predicts that gold will likely reach its Q1 2025 average target of $2,475 an ounce, with the current spot price at $2,372.06 an ounce.
This week, gold’s progress stalled after reports indicated that the People’s Bank of China halted gold purchases for the second consecutive month in June. This development undermined gold’s rally from the previous week, which had been driven by softer-than-expected U.S. nonfarm payrolls data, fuelling optimism about lower interest rates. However, data showing that the Reserve Bank of India, the National Bank of Poland, and the Czech National Bank were all purchasing gold this week provided some encouragement.
TD Securities noted that ongoing central bank buying, along with clearer expectations regarding U.S. interest rate cuts, is likely to support gold prices in the coming months. Analysts at TD stated that the official sector’s continued interest in using gold to diversify their foreign exchange reserves, combined with increased investor uptake once the timing of rate cuts becomes more predictable, should lead to gold rallying to new record highs.
In May, spot gold reached a record high of $2,450.06 an ounce due to increased safe haven demand amid potential conflict between Iran and Israel. However, these levels were not sustained for long, with prices falling sharply to as low as $2,280 an ounce before recovering in late June. Despite this volatility, spot prices have risen by 15% so far in 2024, supported by growing expectations of U.S. interest rate cuts. The Federal Reserve is widely expected to reduce rates by 25 basis points in September.
The steady interest from central banks and the evolving clarity on U.S. interest rate cuts are likely to continue underpinning gold prices, suggesting a positive outlook for the yellow metal in the coming weeks and months.
London-listed company KEFI Gold and Copper plc (LON:KEFI) is an exploration and development company focused on gold and copper deposits in the highly prospective Arabian-Nubian Shield. The Company operates in Ethiopia and Saudi Arabia with projects including Tulu Kapi project, Jibal Qutman EL and Hawiah.
