Gold surges on Fed rate cut speculation, Mideast tensions

Gold rose over one percent on Friday after fresh US inflation data cemented the prospects of more interest rate cuts this year, while safe-haven demand stemming from geopolitical tensions also lifted bullion.

Despite the uncertainty surrounding rate cuts, bullion should continue to gain support due to the geopolitical tensions in the Middle East. This, combined with inflation concerns and US election uncertainties, is expected to drive gold prices to $3,000 by next year, according to Daniel Pavilonis, senior market strategist at RJO Futures.

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Driven by these forces, gold has rallied more than 25% in 2024, making it one of the best-performing commodities of the year.

Gold prices are expected to continue their upward trajectory in the final quarter of 2024.

Analysts project that prices will likely hover around $2,500 to $2,700 per ounce, with the possibility of reaching up to $3,000 by year-end. This outlook is supported by several key factors, including anticipated Federal Reserve rate cuts, ongoing geopolitical tensions, and central bank demand for gold.

The recent surge in gold prices is partly due to expectations of a dovish monetary policy by the Fed, which may further cut rates by up to 75 basis points before the year ends. Additionally, geopolitical instability, particularly in the Middle East, continues to drive investor demand for gold as a safe-haven asset.

Investors should watch for price volatility during this period, as it may present buying opportunities ahead of another potential spike.