(Kitco News) - Gold prices are once again flirting with resistance near $2,400 an ounce, and one research firm expects that it's only a matter of time before the precious metal sets fresh all-time highs.
In their weekly note published Thursday, analysts at Metals Focus said that the eventual monetary policy easing from the Federal Reserve will drive gold prices higher in the second half of the year.
“Later this year, we expect prices will rise again, with a new all-time high likely,” said Neil Meader, Director of Gold and Silver at Metals Focus. “After all, the recent $2,450 peak is lower, in real terms, than the 1980 one, which would have been around $3,000 in today’s prices.”
With a new record peak in sight, Metals Focus expects gold prices to average around $2,250 an ounce for the year, a 16% increase from last year’s record average price.
The comments come as disappointing economic data and growing slack in the U.S. labor market have raised market expectations for the U.S. central bank to start the new easing cycle in September.
Even if the Federal Reserve maintains its aggressive monetary policy stance, Metals Focus does not see much downside for gold through the rest of the year.
The analysts at the UK-based precious metals research firm noted several factors supporting gold’s breakout rally this year, even as the Federal Reserve has hesitated to lower interest rates.
Insatiable appetite from global central banks, a dire global fiscal outlook, geopolitical uncertainty, and China’s weakening economy have all boosted gold prices, helping them to weather headwinds generated by persistent strength in the U.S. dollar and higher bond yields.
“Whether they start this year or next, US rate cuts are coming,” Meader said. “It’s also hard to see the Middle East and Ukraine conflicts being resolved any time soon, and US/China tensions remain high. Lastly, as physical markets become more accustomed to higher prices, gold’s fundamentals should improve.”
