Gold Soars to New Records, $2,700 Targeted as Rate Cuts, Risks Fuel Rally
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Gold prices continue their relentless climb, hitting a fresh all-time high of $2,622 per ounce last week. The precious metal has surged 27.1% year-to-date, outpacing the S&P 500 as rate cut expectations, geopolitical tensions, and central bank buying converge to stoke bullion's rally.
UBS now forecasts gold reaching $2,700 by mid-2025, recommending investors hold a 5% allocation. The bank cites the Fed's 50 basis point cut, which diminished the opportunity cost of non-yielding gold and stoked inflation fears, as a key driver. Elevated geopolitical risks like the U.S. election, Russia-Ukraine war, and Israeli-Palestinian conflicts are also boosting safe-haven demand.
Goldman notes threefold growth in central bank gold purchases since Russia's invasion of Ukraine. Technically, one analyst sees potential for gold to extend its wave 3 uptrend toward $2,800 near-term.
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While headwinds exist for palladium, UBS says platinum's market deficit suggests higher prices, favoring volatility selling strategies on those metals.
With economic uncertainties escalating, gold's trajectory points higher if rate cuts accelerate to combat risks. For investors, holding a modest bullion allocation could pay dividends amid the current turmoil.
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