Thirteen Wall Street market analysts participated in Kitco's gold survey this week, and none predicted a price drop. Eight analysts were bullish on gold for the coming week, while the rest held a neutral view.
Meanwhile, 194 Main Street investors polled showed more division. About 59% predicted gold prices would rise next week, compared to 18% who expected the precious metal to trade lower. The remaining 23% believed gold would trend sideways in the near future.
The main argument of the bullish group stems from the expectation that the Fed will cut interest rates in September, following statements by Fed Chair Jerome Powell. At the Fed's annual symposium on 22/8, Powell said the shifting balance of risks could lead the Fed to alter its policy stance. However, he made no commitment to do so. Powell acknowledged rising risks to the job market but also warned that inflationary pressures persist.
Immediately afterward, the spot price of gold rose by 33 USD to 3,370 USD per ounce at the close of trading on 22/8.
CME's FedWatch Tool shows investors now see an 85% probability of a rate cut next month, up from 75% before the Fed's symposium. US President Donald Trump added to the pressure on 22/8, threatening to fire Fed Governor Lisa Cook if she didn't resign.
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Gold bars stacked in the vault room of Pro Aurum gold house in Munich (Germany), 1/2025. Photo: Reuters |
Gold bars stacked in the vault room of Pro Aurum gold house in Munich (Germany), 1/2025. Photo: Reuters
Ole Hansen, Head of Commodity Strategy at Saxo Bank, believes that after a relatively quiet summer for the gold market, the Fed will help open the door to further gains by cutting interest rates before the end of the year. This would weaken the US dollar, creating a positive environment for gold. In the short term, Hansen said the precious metal could rise above 3,450 USD per ounce before investors could revisit the April record high of over 3,500 USD.
Christopher Vecchio, Head of Futures and Forex Strategy at Tastylive, said gold is poised to rally as the Fed prepares to ease interest rates. "It looks like we are going to get a rate cut, so owning gold continues to make sense for investors," he said.
Michael Brown, Senior Market Analyst at Pepperstone, said that while Powell's comments may have sparked a gold rally, some questions remain unanswered. According to Brown, Powell clearly endorsed the idea of a rate cut in September, but what people are more concerned about is whether this can be seen as a sustained rate cut cycle or just a "one-and-done" event.
Even if gold is not ready for a breakout, Brown remains optimistic about the long-term price, especially as President Trump continues to pressure the Fed, further eroding the independence of monetary policy and boosting the appeal of tangible assets in the process.
Tieu Gu (according to Kitco)
