Investing.com– According to TD Securities, gold prices are forecasted to increase in the coming weeks, driven by steady central bank buying and a clearer outlook on U.S. interest rate cuts.
TD projected that gold could reach its Q1 2025 average target of $2,475 per ounce. Currently, the precious metal is trading at $2,372.06 per ounce.
This week, gold experienced a pause in its upward momentum following reports that the People’s Bank of China had ceased gold purchases for the second consecutive month in June. This development came after a surge in gold prices last week fueled by optimism over potential U.S. interest rate cuts spurred by softer-than-expected U.S. nonfarm payrolls data.
Despite the setback, TD noted that gold received a boost from news indicating that the Reserve Bank of India, the National Bank of Poland, and the Czech National Bank had all been actively buying gold during the week.
TD emphasized that the combination of continued central bank buying and a clearer picture regarding U.S. interest rate cuts is likely to provide support for gold in the coming months.
In a note, TD analysts stated, “Since it looks like the official sector is still interested in using gold to diversify their FX reserves, more uptake from investors when the timing of rate cuts becomes more predictable should see gold rally to new records.”
Spot gold reached a record high of $2,450.06 per ounce in May, driven by increased safe-haven demand amid escalating tensions between Iran and Israel. However, the metal quickly retreated from these levels, dropping to as low as $2,280 per ounce before staging a recovery in late June.
Despite the fluctuations, spot prices have risen by 15% year-to-date in 2024, supported by growing expectations of U.S. interest rate cuts. The Federal Reserve is widely anticipated to announce a 25-basis point rate cut in September.
### Central Banks Support Gold
Central banks, including the Reserve Bank of India, the National Bank of Poland, and the Czech National Bank, have been actively buying gold, reinforcing the metal’s value and demand in the market.
### Volatility and Recovery
The fluctuation in gold prices, reaching record highs before experiencing a sharp decline and subsequent recovery, highlights the volatility in the precious metal market and the resilience of gold as an investment asset.
### Future Outlook
With expectations of further rate cuts by the Federal Reserve and continued interest from central banks in diversifying their reserves with gold, the future trajectory for gold prices looks poised for further growth and potential record rallies in the coming months.
