This week, it broke a record with $2,589.70, and has gained 25 percent in value since the beginning of the year, becoming one of the most profitable products in the commodity market.
Following the strengthening of expectations that the US Federal Reserve (Fed) will cut interest rates by 50 basis points, the ounce price of gold tested historical peaks due to the decrease in demand for the dollar and the decline in bond yields.
The slowdown in the labor market in the US, supported by the dovish steps expected to be taken by the Fed and the reduction in interest rates by the European Central Bank (ECB), are among the factors that have recently supported the ounce price of gold.
Gold prices also rose throughout the year as investors turned to “safe havens” due to tensions in the Middle East. Central banks’ ongoing gold purchases also stood out as an important factor supporting the ounce price of gold.
According to the World Gold Council report, gold purchases by central banks reached a record level in the first half of the year with 483 tons. Gold purchases by central banks more than doubled compared to the previous month in July, rising to 37 tons.
Analysts said demand for gold has increased in Asia, especially in China, as a hedge against geopolitical and economic uncertainty. The region’s lack of confidence in other investment options such as real estate and stocks has also led to a preference for gold.
In addition to the Middle East, Russia, Ukraine and related geopolitical risks, and especially uncertainties regarding the US presidential elections in November, also supported gold prices.
The demand from China, as investors have been putting their cash in more secure areas in the face of difficult economic conditions and real estate problems in that country, has also caused a sharp rise in gold prices.
Analysts also noted that the positive impact of the start of the Fed's rate cut cycle on gold is increasingly evident at a time when gold has historically performed well.
“This year can be called the ‘golden’ year”
Futures and commodity markets expert Zafer Ergezen, in his assessment to AA correspondent, stated that the strong outlook in gold prices continues.
Stating that the course in question was already expected, Ergezen said, “The fact that the ounce price of gold, especially the fact that it was persistent above $2,500-$2,528, was already indicating the possibility of seeing up to $2,600 here and we are very close to those levels. Of course, there was a very rapid increase, especially the fact that the interest rate cuts were about to start was effective here.”
Ergezen emphasized that this year could actually be called the “golden” year after the rapid increases experienced in such a short period of time, and stated that gold has provided more returns than many asset prices.
Emphasizing that the expectations for this year are still continuing, Ergezen noted:
“Interest rate cuts will begin. Geopolitical risks continue, and we sometimes talk about recession concerns. Perhaps one of the rare assets that recession concerns benefit from is gold. It stands out with its safe haven feature. In other words, we can say that the conjuncture is completely in favor of gold per ounce right now and we see pricing under this effect. My expectation for this year was $2,450, $2,500 at the beginning of the year. I had stretched this to $2,600 due to geopolitical risks and its safe haven feature, and I expect the price increase in gold per ounce to slow down above these levels. I still do not think there are very high margins, but we can say that it is a period where buyers will continue, but I would not be surprised if profit realization occurs at the levels of 2,600, 2,615.”
Commerzbank Commodity Analyst Carsten Fritsch stated that the main factor in the increase in the ounce price of gold is the strengthening of expectations for a Fed interest rate cut.
Fritsch said that gold prices increased due to the sharp interest rate cuts expected by the Fed, and noted that gold had the wind at its back when the ECB cut interest rates.
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