The price of gold rose by about 0.3%, reaching a new record high amid the weakening of the US currency and expectations of easing of the Fed's monetary policy.
Since the beginning of the year, gold prices have increased by more than 20%, which was facilitated by increased geopolitical tensions and active purchases of gold by central banks.
"Demand for precious metals, considered as a safe haven asset, remains high as uncertainty is at its peak," said BMI analysts, referring to 2024 being the year of elections, Ukraine's recent incursion back into Russia and growing Middle East tensions.
Meanwhile, the latest US data has restored confidence in the world's largest economy and reduced the likelihood of a recession. Traders are confident that the Fed will cut rates in September, and now the focus is on the scale of the reduction. According to the CME FedWatch Tool, markets see a 28.5% probability of a 0.5% rate cut in September (down from 50% the week before), and a 71.5% probability of a 0.25% rate cut (up from 50.0% the week before). A low interest rate environment tends to boost non-yielding bullion's appeal.
The next catalyst for gold may be the minutes of the July Fed meeting, which will be presented on Wednesday. Investors' attention will also be focused on comments by Fed Chair Powell at the central bank's Jackson Hole Economic Policy Symposium on Aug. 22-24.
Overall, experts expect further growth in gold prices in the long term, given the slowdown in the US economy, upcoming rate cuts, lower yields, a weak dollar, continuing geopolitical risks and strong demand from central banks.
"As soon as the Fed starts cutting rates, gold could reach $2,700 per ounce," BMI analysts said. Meanwhile, Citi analysts see a $3,000 per ounce target by the middle of 2025, and a fourth quarter average price forecast of $2,550 per ounce.