Gold prices seen surging to $2,470 amid rate cuts, c.bank buying- TD

Investing.com-- Gold prices are expected to advance in the coming weeks, TD Securities said in a note, with steady central bank buying and more clarity on U.S. interest rate cuts set to underpin the yellow metal.

TD said that gold was likely to hit its Q1 2025 average target of $2,475 an ounce. Spot gold currently trades at $2,372.06 an ounce. 

The yellow metal stalled this week after reports said the People’s Bank of China stopped buying gold for a second consecutive month in June. This undercut gold’s rally from last week after softer-than-expected U.S. nonfarm payrolls data ramped up optimism over lower interest rates. 

But TD said that gold was encouraged by data showing the Reserve Bank of India, the National Bank of Poland and the Czech National Bank were all buying gold this week. 

TD said that central bank buying, coupled with increased clarity on U.S. interest rate cuts, were likely to underpin gold in the coming months. 

“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 become more predictable should see gold rally to new records,” TD analysts wrote in a note.

Spot gold hit a record high of $2,450.06 an ounce in May, as increased safe haven demand, in the face of a potential conflict between Iran and Israel, boosted the yellow metal. But the yellow metal spent little time at these levels, falling sharply to as low as $2,2800 an ounce before recovering in late-June. 

Spot prices were still trading up 15% so far in 2024, having also taken support from growing bets on U.S. interest rate cuts. The Federal Reserve is widely expected to cut rates by 25 basis points in September.