Tue Sep 17 06:23:53 UTC 2024: ## Gold Poised for Record High Despite Potential Near-Term Dip, Says Goldman Sachs
**New York** – Goldman Sachs predicts gold will reach a record high of $2,700 per ounce by early next year, despite a potential minor setback this week if the Federal Reserve opts for a smaller interest rate cut. The investment bank believes the metal will benefit from rising flows into bullion-backed exchange-traded funds (ETFs) driven by the Fed’s easing monetary policy.
Gold has been a top performer in the commodities market this year, surging by nearly 25% and hitting new highs as central banks increase their gold purchases and traders anticipate the Fed’s pivot to easing. While investors are divided on the size of the Fed’s rate cut this week, with some expecting a half-point reduction, Goldman Sachs expects a more moderate 25-basis-point cut.
Despite a possible near-term decline in gold prices following a smaller rate cut, Goldman Sachs analysts Lina Thomas and Daan Struyven believe ETF inflows, which have been absent during the recent gold rally, will gradually increase as the Fed eases, ultimately pushing prices higher.
“Since ETF holdings only increase gradually as the Fed cuts, this upside is not yet fully priced in,” they said in a note.
Global holdings in bullion-backed ETFs have rebounded in recent months after a decline in mid-May to their lowest levels since 2019. However, despite gold’s strong performance, holdings remain lower year-to-date and significantly below the peak reached during the pandemic in 2020.
Inflows into ETFs reduce the physical supply of gold available in the market, supporting its price. Spot gold was last trading near $2,585 an ounce, while silver, which often follows gold’s movements, gained for a seventh consecutive day and reached $31 an ounce.
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