The price of gold has hit a record high as the U.S. Federal Reserve’s next interest rate decision draws near and central bankers gather for their annual meeting in Jackson Hole, Wyoming.
The spot price of gold reached an all-time high of $2,540.80 U.S. per ounce during Asian trading on Monday (Aug. 19) as expectations grow that the American central bank will lower interest rates at its meeting taking place September 17-18.
Traders and analysts also seem bullish on gold as central bankers from around the world, including Bank of Canada Governor Tiff Macklem, meet for their annual economic policy symposium in Jackson Hole.
U.S. Federal Reserve Chair Jerome Powell is expected to speak to media at the gathering this week and provide more insight on the central bank’s current view of inflation and interest rates.
Futures traders are currently betting 100% that the U.S. Federal Reserve will lower interest rates in September. The current debate is whether the central bank will cut by 25 or 50-basis points.
Lower interest rates are positive for gold as they reduce the opportunity cost of buying and holding the precious metal, making it a more attractive investment.
At the same time, central banks around the world continue to buy gold as geopolitical uncertainty grows with wars raging in Europe and the Middle East.
Some analysts are forecasting that the price of gold will reach $2,700 U.S. per ounce by year’s end and hit $3,000 U.S. in 2025 as the U.S. Federal Reserve enacts multiple interest rate reductions.
Several other central banks, including the Bank of Canada, have already begun to lower interest rates this year as inflation declines and economic growth weakens.
