Gold prices soar to all-time highs, experts forecast up to $3,200 per ounce

Flare-up in West Asia, US elections, further rate cuts by Fed may keep fuelling bullish trend, say experts

Gold prices have surged into uncharted territory, driven by Iran getting directly involved into the escalating conflict between Israel and Lebanon. This latest catalyst in geopolitical tension has fuelled a bullish sentiment, with gold now trading at all-time high levels.

Market analysts are now projecting one-year targets between $2,900 and $3,200 per ounce, up from the current $2,650.

Since the beginning of September 2024, the yellow metal has gained 5.24 per cent in international markets and 4.5 per cent in Mumbai’s spot market. The rally shows no signs of slowing.

“The gold train is running without breaks,” said T Gnanasekar, co-founder and CEO of Commtrendz Research. “The US Federal Reserve’s decision to cut interest rates has created a favourable environment for a bullish trend in gold.”

Stimulus measures from China, uncertainties surrounding the US presidential elections, and the recent flare-up in West Asia are boosting this rally, he pointed out.

Bullion market experts believe Israel’s actions are predictably volatile, and any retaliatory strike by it against the latest Iranian rocket attack could further inflame the situation, accelerating gold’s upward trajectory.

The surge in gold prices was first triggered by expectations of an interest rate cut by the US Federal Reserve. Mid-September saw an aggressive half percentage point rate cut — the sharpest in four years — indicating the Fed’s growing focus on boosting employment and economic growth.

Nigam Arora, a US-based market analyst and author of the Arora Report, sees gold as “overbought” in the short term. “The Arora Report has been bullish on gold. However, around $2,700, gold is technically overbought. If Israel hadn’t struck Hassan Nasrallah, we would likely have seen a pullback in prices,” he told Business Standard. “Now, the future of gold hinges on what happens in West Asia.”

In India, gold has reached record highs despite the reduction of import duty on the metal. The Indian government slashed the gold import duty from 15 per cent to 6 per cent in July this year, which resulted in easing of prices in the domestic market. However, this relief was short-lived: Standard gold in Mumbai’s Zaveri Bazaar is now priced at Rs 75,213 per 10 grams, the highest it’s ever been. Futures on the MCX have crossed Rs 76,000 per 10 grams.

In a report released last week, Wayne Gordon, strategist at UBS AG Singapore, predicted even higher prices over the next 6 to 12 months, “driven by greater investment demand alongside a drop in US real rates, a seasonal recovery in jewellery consumption, and ongoing central bank purchases.”

“Overall, we recommend an allocation of around 5 per cent to gold within a balanced USD portfolio. Gold remains most preferred in our global asset allocation,” Gordon suggested. UBS has revised its forecasts accordingly, predicting gold will hit $2,750 per ounce by the end of 2024, $2,850 by mid-2025, and $2,900 by September 2025.

Gnanasekar remains similarly bullish, expecting gold to reach $3,000 to $3,200 per ounce, possibly by the end of this financial year. He cited ongoing uncertainties around the US presidential elections, geopolitical tensions, moderating interest rates, and global stimulus as factors that could result in price targets being reached faster than projections.

Oil prices surge more than 3% 

Oil prices climbed more than 3 per cent on Wednesday as Israel and the United States vowed retribution over Iran’s biggest ever direct attack on its regional adversary, firing more than 180 ballistic missiles. With Israel also ordering more sold­iers into Lebanon to battle Iran-backed militant group Hezb­ollah, the conflict has rapidly intensified with little sign of de-escalation despite international pleas. That has sent oil prices surging, with Brent futures up $2.26 to $75.82 a barrel.          Reuters