Gold closes higher and breaks historic record, with expectations about the Fed

Gold closed higher and renewed its historic record this Thursday (28), amid expectations for interest cuts from the Federal Reserve (Fed, the US central bank). However, analysts are divided on the possibility of the rally continuing in the coming months.

On Comex, the metals division of the New York Mercantile Exchange (Nymex), gold scheduled for delivery in June, the now more liquid contract, closed up 1.16%, at US$ 2,238.4 per troy ounce, a new record historic. In the monthly variation, gold gained 8.94%.

The outlook for gold prices remains “constructive”, as investors consolidate expectations for three interest cuts from the Federal Reserve, starting in June, analyzes Goldman Sachs. For the bank, this environment should encourage more purchases of the metal by ETF funds, with gold also benefiting from geopolitical hedging in the face of tensions in the Middle East, war in Ukraine and the growing importance of the electoral cycle in the US.

On the other hand, Julius Baer considers that the “bullish” mood in the gold market should cool down and cause a “massive effect” of downward pressure on prices. The Swiss bank notes that demand from China is expected to remain high this year and that central banks in non-Western countries will maintain large volume gold purchases to reduce dependence on the dollar, offering limited support for the precious metal.

“The data does not suggest a constant momentum for gold but rather an extreme volatile trend. China and the Central Banks should be seen as structural elements of support for current gold prices, rather than fuel for the rally”, assesses Julius. The Swiss bank adds that only a new catalyst – such as Fed interest cuts in a recessionary environment in the US – could generate momentum for the precious metal, a scenario it considers unlikely. “All in all, we see more downside risks than upside risks for gold,” he pointed out.

With information from Dow Jones Newswires