Gold price set to stay at around $2,500 by year-end – Commerzbank

Gold (XAU/USD) touched a new all-time high on Friday. Upcoming interest-rate cuts by the Federal Reserve should continue to support prices, Commerzbank's Commodity Analyst Carsten Fritsch notes, raising the forecast for Gold price to $2,500 per troy ounce at year-end from $2,300 previously.

Gold prospects brighten as Fed looks ready to cut rates

“The US inflation rate slipped below the 3% mark in July. However, the core rate excluding energy and food was still slightly higher at 3.2%. Although this is sufficient for the Fed to cut interest rates for the first time in September, it is hardly enough for a rate cut of 50 basis points. The Fed Fund Futures are now pricing in slightly less than 100 basis points of rate cuts by the end of the year, but this is still sizeable. We therefore expect the all-time high to be reached and exceeded in the not-too-distant future.”

“Due to the clear signs of significant interest rate cuts by the Fed, we have raised our forecast for the gold price at the end of the year to $2,500 per troy ounce (previously $2,300). The three interest rate cuts we expect by the end of the year are likely to be followed by three more in the first half of 2025. This is a total of two interest rate cuts more than we had previously expected.”

“Accordingly, we expect the gold price to rise further to $2,600 by the middle of next year. At the end of 2025, the gold price is likely to fall to $2,550 (previously $2,200) in view of the renewed rise in inflation and the associated speculation of interest rate hikes in the following year.”