Many factors drive gold prices
Last night, the price of gold on the December futures contract hit a record high of $2,694.9/ounce. The technical chart still maintains a strong bullish trend for gold.
The trend of central bank rate cuts continues. China on Tuesday cut the interest rate on its one-year medium-term lending facility to 2.0% from 2.3%. The move was not unexpected.
The People's Bank of China (PBOC) also lent 300 billion yuan (about $43 billion) to financial institutions, which is good news for the raw commodities sector, including precious metals.
Meanwhile, Sweden's central bank, the Riksbank, has just cut its key policy rate by 0.25% to 3.25%. The Riksbank is expected to cut rates further this year.
The Israel-Hezbollah military conflict has escalated recently. According to Aljazeera, Hezbollah launched a rocket targeting the headquarters of the Israeli Intelligence Agency (Mossad) near Tel Aviv on September 25.
Sirens sounded throughout Tel Aviv when the missile intrusion was detected. Immediately afterwards, the Israeli military immediately deployed its defense system and successfully intercepted it.
The death toll from the series of explosions has so far reached 500 people killed and around 10,000 injured. Hezbollah has repeatedly accused Israel of being behind the attack. This situation is fueling demand for safe haven gold.
Technically, gold has the strong overall near-term technical advantage. The bulls’ next upside price objective is a close above $2,800/oz. The bears’ next near-term downside price objective is $2,572.5/oz.
Banks raise outlook on precious metals
Commodity analysts at Canadian bank BMO Capital Markets have released their latest commodity price forecasts, highlighting gold as their most notable gainer ahead of the fourth quarter.
Looking ahead, the bank forecasts gold prices to average around $2,700 an ounce in the fourth quarter, up 15% from its previous forecast of $2,350 an ounce.
Forecasting gold prices over the next 12 months, the Canadian bank predicts the average price in 2025 will be around $2,663/ounce, up 21% from its previous estimate of $2,200/ounce.
BMO notes that interest rate cuts by the US Federal Reserve (Fed), which is currently leading the global easing trend, will benefit gold. However, analysts are paying more attention to the precious metal's role as a global currency.
“Gold is being brought back into the monetary system as the trend of de-dollarization of trade accelerates,” analysts said.
BMO said it expects gold's role as a global trade currency to continue to grow into 2025 as the global economy slows.
Major overseas markets today saw the USD index rebound. Recorded at 1:20 a.m. on September 26, the US Dollar Index, which measures the greenback's movements against six major currencies, was at 100.614 points (up 0.44%).
Nymex crude oil prices are lower and trading around $70.00 a barrel. The yield on the benchmark 10-year US Treasury note is falling and is currently at 3.77%.
