Gold Price News: Gold reaches again new market highs

The gold price continued its upward trend on September 23, 2020, opening at a new record high of USD 2,631.00 per troy ounce. Analysts point out that this development is driven by a combination of ongoing global uncertainty, monetary easing and supply shortages. Market momentum is particularly supported by the prospect of further interest rate cuts by major central banks, such as the US Federal Reserve, which has signaled further easing of its monetary policy in the near future.
 

The recent easing of monetary policy by the European Central Bank and the Federal Reserve in the US has weakened the euro and the US dollar, making gold more attractive as an investment. The lower interest rates reduce the opportunity cost of holding gold, which further increases its demand. The current expectations of the markets, as reflected in futures prices, assume a further reduction in the federal funds rate to around 2.75% by the end of 2025. Lower real yields on US government bonds and the resulting weakening of the US dollar also make gold more attractive to international buyers. Finally, geopolitical uncertainty and robust investor demand, particularly from Europe and North America, continue to underscore the importance of gold as a store of value.
 

Not only the monetary policy outlook is driving the gold price, but also the ongoing supply constraints of the precious metal. Average all-in sustaining costs (AISC) for gold mines have increased by 10% year-on-year and stood at around USD 1,439.00 per troy ounce at the beginning of 2024. These cost increases also correlate with other challenges such as depleted gold deposits and rising extraction costs, which keeps the supply of gold scarce and supports the price of gold at a very high level.
 

The current outlook for the gold price remains bullish. Analysts currently suggest that the gold price could rise to as high as USD 3,835.00 per troy ounce over the next five years. These forecasts are based on the continuation of current trends in real income growth, fiscal imbalances and geopolitical risks. In the short term, however, the next few months will be very decisive as economic indicators and geopolitical developments will continue to influence market sentiment.