Let the rate cuts and games begin!

(Kitco News) - The gold market may not have been able to hold $2,400 an ounce as last week’s record highs triggered some significant selling pressure; however, despite the volatility, bullish investors are not giving up on the precious metal.

Many analysts have said that they see the correction in gold as a buying opportunity, as it’s only a matter of time before prices push higher, specifically as the Federal Reserve is expected to cut interest rates in September and U.S. election volatility drives geopolitical uncertainty.

The Federal Reserve is meeting next week, and while the committee is expected to keep interest rates unchanged, this meeting will be extremely important. Markets have all but priced in a rate cut in September, and this will be the meeting where Federal Reserve Chair Jerome Powell either pushes back on these expectations or leans into them; either scenario is going to have an impact on gold next week.

Of course, impending interest rate cuts are only telling half the story for gold, which remains an important global safe-haven asset.

A perfect storm for gold continues to brew as the U.S. central bank prepares to begin a new easing cycle, and geopolitical uncertainty remains elevated ahead of the U.S. election.

Volatility in the U.S. presidential election remained elevated this week as President Biden ended his campaign. In less than 48 hours, Democratic Vice President Kamala Harris secured enough delegate votes and endorsements to become the presumptive candidate ahead of next month’s Democratic National Convention. At the same time, she also set a fundraising record, raising nearly $100 million in donations within 24 hours.

Last week, markets were starting to price in a Republican victory, with former President Donald Trump regaining the White House, but the race has become a lot tighter and is far from over.

Last week, we noted that both candidates should be positive for gold as proposed policies on both sides of the aisle are expected to drive the deficit higher.

However, the latest research from the World Gold Council noted that there is a lot more going on ahead of the U.S. elections.

They noted that no matter who is elected, the massive political divide in the U.S. means geopolitical uncertainty is expected to remain, no matter who is in power.

“Historically, the US election has not been seen as a geopolitical risk, but both the world and the US electorate remain highly polarized. This, in turn, highlights the need for robust hedges in investor portfolios, a role that gold fulfills effectively,” the analysts said in the report.

Finally, Friday was the opening ceremony for the 2024 Olympic Summer Games in Paris, France. We want to wish all athletes good luck on their quest for Olympic gold.

One interesting fact is that the Olympic medal is currently worth about $1,000 as it only contains six grams of gold. The medal is only gold-plated and made of more than 92% silver, with the rest being copper.

However, the achievement of winning a gold medal remains priceless.

Enjoy the Games and have a great weekend.