Gold (XAU) Price Forecast: Record High at $2,615, Is $2,700 Next?

Gold Hits Record High as Fed Rate Cuts Fuel Rally

Gold surged to a new record high on Friday, reaching $2,615.26 per ounce, supported by renewed market expectations of further U.S. interest rate cuts. This milestone places gold in a strong position to test higher levels, with the next targets in the $2,649.43 to $2,660.90 range. Support is expected at $2,546.86, and stronger backing lies at $2,477.18, where the 50-day moving average offers intermediate support.

At 11:38 GMT, XAU/USD is trading $2612.94, up $26.03 or +1.01%.

U.S. Rate Cuts Boost Gold’s Appeal

Gold’s rally was driven by the Federal Reserve’s recent decision to cut interest rates by 50 basis points, with projections pointing to further cuts by year-end and into 2025. With interest rates dropping, the opportunity cost of holding non-yielding assets like gold is reduced, enhancing gold’s appeal as a safe haven during economic uncertainty.

“Gold is significantly under-owned in Western markets and remains one of the few assets that can counter fiscal threats,” remarked Ryan McIntyre of Sprott Asset Management. He emphasized that alongside rate cuts, ongoing U.S. dollar debasement and uncertain fiscal policies across Western economies are driving increased interest in gold.

As the U.S. dollar weakens, non-dollar investors find gold more attractive, further supporting the metal’s rally. Gold has gained over 26% so far in 2024, bolstered by geopolitical tensions in the Middle East and Europe, adding layers of uncertainty that traditionally benefit gold.

Retail Demand Eases in Asia Despite Price Surge

Although institutional demand remains robust, high gold prices have tempered retail demand in Asia, where price sensitivity is higher. China’s recent halt in gold imports from Switzerland—its first in over three years—alongside discounts in India, highlights the strain on demand in these major consumer markets.

Despite softer demand from Asia, financial analysts remain optimistic about gold’s future. “Gold could push towards $2,700-$2,800 in the next 12 months,” said Kyle Rodda of Capital.com, citing a buy-the-dip sentiment that continues to dominate the market.

Market Forecast: Bullish Outlook

With interest rate cuts likely to continue and fiscal uncertainties lingering, the outlook for gold remains bullish. Technical indicators suggest that if gold maintains its support above $2,546.86, a push towards the $2,650-$2,700 range is probable. Traders should watch for dips as buying opportunities, particularly as the dollar weakens further. Longer-term, gold may test the upper levels of $2,800 if economic and geopolitical risks remain elevated.