Gold Rises to New Record High
Gold prices rose to a new record high on Wednesday, nearing $4,200 an ounce, as investors sought safe haven in the yellow metal and bolstered their expectations of additional monetary easing in the United States.
President Donald Trump accused China on Tuesday of economic aggression. These remarks came after China threatened further retaliation following its sanctions on five U.S. units of South Korean shipbuilder Hanwha Ocean.
Adding to broader market concerns was the ongoing U.S. government shutdown, which, according to U.S. officials, is beginning to negatively impact the economy.
Gold also found support after Federal Reserve Chairman Jerome Powell said yesterday, speaking at the annual meeting of the National Association for Business Economics, that downside risks to employment appear to have increased and that a sharp slowdown in employment increasingly threatens the U.S. economy. He hinted at the possibility of two more interest rate cuts this year.
Analysts' Forecasts - Where Are Gold Prices Headed?
In this complex environment, analysts and financial institutions expect gold's upward trend to continue:
Optimistic forecasts: Goldman Sachs analysts expect gold to rise to around $5,000 per ounce by the end of next year, while Yardeni Research President John F. Kennedy expects gold to reach $10,000 per ounce sometime between mid-2028 and early 2029.
Future Drivers
Matt Simpson, senior analyst at StoneX, notes that the US government shutdown and Jerome Powell's hawkish comments have provided the latest drivers for the accelerating rise in gold prices. He adds that the rally has also become a momentum trade, with traders rushing to buy simply to chase falling gold prices.
Potential Risks
However, some analysts warn that the lack of clarity on the Federal Reserve's stance on the timing of additional interest rate cuts could pose a risk to gold's continued rally, especially if the central bank decides to adopt a more hawkish monetary policy stance in the future.
