Gold Price to hit $2,700 by mid-2025

In August 2024, the price of gold increased by 2.3% per month. New record highs in the price of gold have become a regular occurrence in recent months – in August, the cost exceeded $2,500 per ounce for the first time.

It should be noted that this time the situation is a little different. While the main actors in the 20-month rally were central banks and Asian investors, now Western traders have also joined the momentum. The rise in the price of gold from $2,300 to $2,500 was mainly dictated by European and American investors who sought to diversify their portfolios with the precious metal amid the expected decline in interest rates.

Low rates make gold more attractive as it becomes a more competitive asset with low-yielding Treasuries. Accordingly, investors were waiting for a clear signal that a rate cut was imminent. A similar signal last month was the Federal Reserve governor’s announcement that “the time has come” for interest rates to start falling.

The Fed meeting is scheduled for September 17-18, and the market expects a 25 basis point cut. Although the price has been steadily rising, outflows from gold ETFs have been flat at the beginning of the year. This, in turn, is a result of investors preferring to invest in physical gold over exchange assets. However, the trend of outflows seems to have changed since June this year – for the second month in a row, an increase in investments was recorded in ETFs. Additionally, with the Diwali holiday approaching, demand in India has improved.

Gold imports into India will likely increase during this period, especially considering that import duty concessions have been announced. Since the beginning of the year, the price of gold has risen by 21.3%. Due to demand dynamics and existing geopolitical risks, its price increase is likely to continue. According to UBS, the price of gold should reach $2,700 by mid-2025.