"New highs every day" - overnight, spot gold broke through $2,500 per ounce during trading, setting a new historical record. Boosted by hopes of an upcoming interest rate cut by the Federal Reserve, as well as increased geopolitical friction in the Middle East, gold prices surpassed the $2,500 per ounce mark for the first time. So far this year, gold has risen by $50 per ounce, with an increase of 22%, making it one of the most profitable investments of 2024.
London spot gold reached a maximum increase of 2.20%, probing $2,509.5 per ounce, and closed at $2,506.76 per ounce, up 2.01%. International precious metal futures generally closed higher. COMEX gold futures rose 2.16%, reporting $2,546.2 per ounce, a historical high, with a weekly increase of 2.94%; COMEX silver futures increased by 2.35%, reporting $29.085 per ounce, with a weekly increase of 5.43%.
The market's enthusiasm for gold has become fervent. The world's largest gold ETF, SPDR, added 7.19 tons in one day, reaching 854.97 tons, showing a clear increase compared to the initial 810 tons or so at the beginning of the year. Duan Fulin, an analyst at Hualian Futures, stated that the July non-farm employment data was significantly lower than expected, with the unemployment rate continuing to rise, increasing expectations for a Federal Reserve interest rate cut. However, the market already anticipates a cut in September, especially with the recent spread of pessimistic sentiment in commodities, leading to catch-up declines in previously strong varieties, and gold is consolidating at high levels.
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While gold prices are rising, central banks' attitudes towards gold are diverging. According to the latest June data, the net purchase of gold by global central banks was 12 tons for the month, with Uzbekistan and India each increasing their gold reserves by 9 tons. Singapore was the largest seller of gold in June, selling 12 tons of gold reserves.
In addition, the major buyer, the People's Bank of China, suspended the increase in gold reserves for the third consecutive month in July, after having purchased gold for 18 consecutive months. Some experts point out that this is related to the trend of gold prices reaching new highs this year.
However, the rise in gold prices may not end here. Bart Melek, Global Head of Commodity Strategy at TD Securities, pointed out that gold investors generally believe that the Federal Reserve will be aggressive in its interest rate cut policy, and many expect gold prices to rise further to $2,700 in the next few quarters.
Alex Kuptsikevich, Senior Market Analyst at FxPro, predicts that gold may eventually trade between $2,800 and $2,900. Some also anticipate that the future price of gold will be closely related to the situation in the Middle East and the Russia-Ukraine conflict.
He Jinlong, General Manager of Youmei Li Investment, believes that gold remains a high-quality asset that can be deployed at present. He stated that although gold often has a safe-haven attribute during periods of market uncertainty, if market sentiment is under extreme financial crisis expectations, the correlation between large asset classes with higher volatility will also increase, and when sentiment eases, it often brings a short-term rebound.
International investment banks are also actively bullish on gold. Recently, Citigroup has once again raised its outlook for gold. They believe that over the past two years, central bank investment demand has continued to increase, accounting for a large part of mine supply, driving gold prices higher. They expect that central bank gold purchases can support gold prices to stabilize at $2,700 to $3,000 per ounce in the future market.