Gold prices hit another record high in September. Heading into October, gold appears poised for further gains, with forecasts ranging from $2,600 to $2,800 an ounce. This bullish outlook builds on gold’s impressive gains since the start of the year, according to CBS News.
Henry Yoshida, a certified financial planner and co-founder of Rocket Dollar, predicts that "gold prices will likely continue to rise steadily."
He cited central bank buying and expectations of Fed rate cuts as key drivers, with his bullish forecast for gold reaching $2,800 an ounce in October.
While Yoshida looks to monetary policy, Will Rhind, CEO of investment firm GraniteShares, finds inspiration in historical trends. He notes that “gold prices have risen an average of 8.5% in the six months following a 50 basis point rate cut by the Fed,” citing data from 2020. This pattern drives his forecast of $2,700 an ounce by the end of October.
Jerry Prior, COO and senior portfolio manager at Mount Lucas Management, takes a more cautious view, seeing gold prices stabilize between $2,600 and $2,700 in October. “We don’t see any reason to sell gold here,” he said, pointing to the Fed’s accommodative interest rate path as a key reason.
Key factors driving gold prices
While there are many different predictions about gold prices, experts agree on one thing: The upward trend in gold prices is likely to continue due to a number of factors.
Interest Rate Changes: Yoshida noted that as interest rates fall, many markets see gains. He expects gold to follow this trend, benefiting from a changing interest rate environment.
Global Uncertainty: Geopolitical tensions are high right now with the upcoming US election and ongoing conflicts around the world. Rhind noted, “rising geopolitical tensions in the Middle East and Ukraine” are driving demand for gold.
Dollar movements: “When the Fed moves to cut rates, the dollar weakens and gold tends to move higher,” Prior said. This inverse relationship between gold and the greenback typically boosts gold prices when the dollar falls.
What does the October gold outlook mean for investors?
October's gold outlook presents both opportunities and challenges for investors.
The US will soon release more economic data such as the jobs market. “If the jobs numbers continue to deteriorate, gold prices could go higher,” Rhind said.
In addition to the labor market, Rhind recommends keeping an eye on the performance of the US dollar, as these factors could also impact gold prices. “If interest rates continue to fall, that would be positive for gold,” he explained.
If you are considering investing in gold, Yoshida recommends that long-term gold investors maintain their positions, while those new to gold investing or underinvested should consider increasing their allocation.
