International gold prices are rising, with the cost of standard gold bars surpassing $1 million for the first time. Market sentiment indicates that gold prices will continue increasing despite recent U.S. interest rate cuts.
According to CNBC, the price of December gold futures traded on the New York Mercantile Exchange reached about $2,545 per ounce (31.1g) and closed at $2,541.3 during the trading session, marking a 0.1% increase from the previous session. On the same day, the spot gold price was trading at $2,504.53 per ounce as of 8 PM Eastern Time, which is also a 0.1% rise compared to the previous day.
After reaching an all-time high of $2,509.65 per ounce on Friday, international spot gold prices have slightly retreated. Foreign media reported that the standard gold bar, commonly held by central banks, typically weighs 400 ounces, and its prices this month have crossed the $1 million mark for the first time.
Sabrin Chowdhury, director and head of commodities analysis at BMI, a market research firm under the U.S. credit rating agency Fitch Ratings, predicts that gold will “hit multiple highs in 2024.” Citing the war in Ukraine and tensions in the Middle East, she emphasized that “gold prices rise in uncertain situations, and uncertainty is at its peak.”
Chowdhury also pointed out the Federal Reserve’s potential interest rate cuts. She explained, “Once the Fed starts to cut rates, likely next month, gold could reach $2,700 an ounce.” CNBC noted that a drop in interest rates would reduce the investment appeal of U.S. Treasury bonds, which compete with gold among safe assets. Additionally, a decrease in dollar value due to rate cuts lessens the burden for investors holding other currencies when purchasing gold priced in dollars. Generally, lower interest rates lead to an influx of funds into riskier assets like stocks, reducing the popularity of safe-haven assets like gold. However, gold’s appeal remains strong due to current global uncertainty.
Moreover, investors concerned about inflation in the U.S. and other countries are turning to gold as a hedge against inflation. The rising demand for gold from India’s rising middle class also contributes to the surge in gold prices. On Monday, Citibank projected that gold prices could reach $3,000 per ounce by mid-2025.
Investors are keeping a close eye on the Fed’s interest rate decisions. The Fed is set to release the minutes from last month’s Federal Open Market Committee (FOMC) meeting on the 21st. The Fed will hold its annual symposium in Jackson Hole, Wyoming, three days from the 22nd. The market believes that Fed Chair Jerome Powell may provide hints about a rate hike in September during his speech in Jackson Hole on the 23rd. Giovanni Staunovo, an analyst at Swiss bank UBS, predicts, “Gold prices may continue to rise and reach $2,600 per ounce by the end of the year,” adding, “All eyes will be focused on Powell’s imminent rate cut signals.”
