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Gold prices to be boosted by Fed rate cuts according to Goldman Sachs
Gold prices to be boosted by Fed rate cuts according to Goldman Sachs
The analysts at Goldman Sachs reiterated their optimistic view on gold, emphasising that the Federal
Reserve's anticipated reduction in interest rates will probably lead to an increase in gold prices.
The bank cites growing central bank demand and a robust correlation between Fed policy and gold
prices to support its $2,700/oz projection for early 2025.
Goldman Sachs explains that increased central bank purchases, particularly from developing nations,
are primarily responsible for the rise in gold prices, despite worries that the conventional inverse link
between interest rates and gold has eroded since 2022.
The bank argues that these nations have significantly boosted their gold holdings, changing the
relationship between interest rates and gold prices. They are worried of US financial sanctions and the
Goldman does, however, note that "changes in interest rates continue to lead to changes in gold
prices," adding that when rates decline, gold gains appeal as a non-yielding asset.
According to analysts, the market has already factored in the anticipated rate reduction from the Fed.
