New highs again! The bullish logic for gold remains unchanged as gold prices approach the $3,800 mark
Gold futures prices hit a new historical high, approaching $3,800 per ounce, as the market anticipates further interest rate cuts by the Federal Reserve, leading to continued inflows into the gold market. Gold futures for September delivery rose 1.1%, closing at $3,780.60 per ounce, while silver futures also increased by 0.9%. Federal Reserve Chairman Jerome Powell hinted at the possibility of more rate cuts, with the market expecting a 25 basis point cut in both October and December. Gold has risen 40% this year, marking a significant annual increase since 1979, driven by uncertainty in U.S. policy and geopolitical factors
According to the Zhitong Finance APP, gold futures prices rose to nearly $3,800 per ounce on Tuesday, setting a new historical high. As the market anticipates that the Federal Reserve will further lower interest rates this year, funds continue to flow into the gold market, creating a strong influx of safe-haven capital. Gold futures for September delivery on the New York Stock Exchange closed up 1.1% at $3,780.60 per ounce, marking the third consecutive day of record highs. Silver futures for September delivery also rose 0.9%, closing at $44.192 per ounce, which is also the third consecutive increase and the highest level since May 2, 2011.
In his latest remarks, Federal Reserve Chairman Jerome Powell seemed to suggest that there may be more rate cuts before the end of the year. He stated that the central bank is facing a "serious situation," with risks of inflation exceeding expectations, while weak job growth has raised concerns about the health of the labor market.
Bob Haberkorn, a market strategist at RJO Futures, stated in a report: "The gold market believes that his remarks did not carry significant meaning compared to last week's tone, insufficient to change the upward trend of gold."
Traders still expect the Federal Reserve to lower interest rates in October and December, despite having already cut by 25 basis points earlier this month. Currently, according to the CME FedWatch Tool, the market expects a 93% probability of a 25 basis point rate cut in October and a 77% probability in December.
Gold is experiencing one of the strongest upward trends in decades, having risen 40% so far this year, marking the most significant annualized increase since 1979, when global investors flocked to the precious metals market due to inflation concerns.
Unlike previous crises, the current demand appears to be driven by uncertainties in U.S. government policy, concerns about the dollar, and geopolitical instability. Market volatility has been exacerbated by Trump's tariff policies and his repeated criticisms of the Federal Reserve. Additionally, geopolitical conflicts have left the market in an unstable state. A variety of investors, from retirees to hedge funds, are pouring into the market, and global central banks have also sparked a "gold rush."
Against this backdrop, major Wall Street banks have further raised their gold price forecasts following the recent record highs.
Deutsche Bank believes that after gold prices exceeded its previous 2025 forecast target of $3,700, there is still room for further increases, with the bank predicting that the average gold price next year will reach $4,000 per ounce Deutsche Bank also expects the Federal Reserve's easing cycle to restart, with its economists believing there is a risk of downward revision to the baseline forecast— the bank anticipates that the Federal Reserve will implement three rate cuts in 2025 and maintain rates unchanged in 2026. Analysts stated, "The independence of the Federal Reserve faces ongoing challenges, and changes in the composition of the Federal Open Market Committee members lead to uncertainties regarding the Fed's response mechanism next year."
Deutsche Bank analyst Michael Hsueh stated, "As gold prices have reached our average forecast of $3,700 per ounce for 2026, we believe the likelihood of further increases is greater than a corrective pullback to its financial fair value."
Hsueh believes that the foreign exchange and interest rate environment remains favorable for further increases in gold prices, while positioning indicators have not become excessively inflated. Hsueh noted, "Although gold appears relatively expensive compared to its fair value, we believe this is primarily due to strong official demand, and we expect this strong trend to continue."
The bank expects investment demand to remain a strong supporting factor, pointing out, "The size of developed market ETFs is still 17 million ounces lower than the peak in 2020, and futures positions for one-year and two-year contracts have not expanded."
Additionally, UBS has raised its gold price forecast to reach $3,800 per ounce by the end of 2025 and $3,900 by mid-2026, citing expectations that the Federal Reserve will resume rate cuts amid weak U.S. labor data. Goldman Sachs reiterated its bullish outlook on gold, with its commodities team continuing to see upside risks to its mid-2026 forecast of $4,000 per ounce.
Furthermore, JPMorgan expects spot gold prices to break the $4,000 per ounce mark in the first quarter of 2026. Citigroup also believes that gold could remain strong until the first quarter of 2026, supported by cyclical factors (weakening U.S. labor market, increased tariffs, or concerns over global growth) and structural factors (concerns about the sustainability of U.S. debt, the dollar's status, and the independence of the Federal Reserve)
