Gold prices are hitting new highs in 2024 and are among the most sought-after investments in the commodity markets. The XAU/USD index touched $2,575 on Tuesday and is gearing up to breach the $2,600 mark.
The precious metal is bullish, and retail investors, institutional funds, and central banks have made massive profits this year. It is up close to 25% year-to-date, with no signs of slowing down anytime soon.
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Ahead of the Fed meeting on Tuesday and Wednesday, leading investment bank Goldman Sachs has turned bullish on gold. The bank forecasted that gold prices could skyrocket in the charts if the Feds initiate interest rate cuts. Therefore, the next two days are crucial for the precious metal, and an entry position today could reap the rewards.
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Gold Prices Could Head North After the Fed Meeting, Says Goldman Sachs
Goldman Sachs had previously maintained its forecast, estimating that gold prices could reach $2,700 in Q1 of 2025. However, it was noted that if the Fed cut interest rates by 25 bps, gold could surge in value and reach the target before the tentative timeline. The confidence in the precious metal comes as it outperformed all commodities by a larger margin this year.
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Goldman Sachs wrote that any “changes in interest rates continue to lead to changes in gold prices. ” The investment bank said gold becomes attractive whenever interest rates fall, leading to higher prices in the indices.
Nonetheless, there is no guarantee that the Feds will cut interest rates in Tuesday and Wednesday meetings. The markets mostly speculate that a 25 bps rate cut is on the cards, but it is not official yet.
We will have to wait and watch for the outcome of the Fed meeting, which will eventually decide the direction of the global financial market.