Investing.com — Federal Reserve Rate Cut Boosts Gold Prices, Analysts Predict $2,800 – $3,000 per Ounce by 2025
Analysts at Citi are bullish on gold following the Federal Reserve’s recent interest rate cut. They are projecting a baseline average price of $2,800 to $3,000 per ounce in 2025. Gold prices hit a record high in Asian trade on Monday, driven by optimism over lower US interest rates and uncertainty in the market.
The Fed’s decision to slash borrowing costs by 50 basis points last week has sparked interest in gold as lower rates reduce the opportunity cost of investing in non-yielding assets. Additionally, a decrease in borrowing costs diminishes the appeal of the dollar and debt.
This week, investors are eagerly awaiting speeches from Fed members, particularly Chair Jerome Powell, as well as the release of the monthly personal consumption expenditures price index data. Central bank meetings in Switzerland and Sweden are also expected to result in interest rate cuts, further impacting the market.
In the industrial metals sector, optimism over rate cuts has also boosted copper prices. Traders are closely monitoring stimulus measures in China, following the unexpected repo rate cut by the People’s Bank of China to boost local liquidity.
According to analysts at Citi, copper could experience a bullish trend if the Fed cuts and China’s easing measures lead to a soft landing and a rebound in the global manufacturing growth cycle. However, the path may be volatile, especially if there is a surprise victory for Republican presidential candidate Donald Trump in the US elections, which could pose risks related to tariff implementation.
In conclusion, the recent Fed rate cut has created opportunities in the gold and copper markets, with potential for significant price increases. Investors should keep a close eye on upcoming economic data releases and central bank meetings to make informed decisions about their investment strategies.