Gold expected to end year at around $2,500, likely to rise further in 2025

Gold (XAU/USD) hit a new all-time high on Friday. Future interest rate cuts by the Federal Reserve should continue to support prices, notes Carsten Fritsch, commodities analyst at Commerzbank, raising his gold price forecast to $2,500 per troy ounce by the end of the year from $2,300 previously .

The outlook for gold is brightening as the Fed looks poised to cut rates

“The US inflation rate fell below the 3% mark in July. However, the core rate excluding energy and food was still slightly higher at 3.2%. While that’s enough for the Fed to cut interest rates for the first time in September, it’s not enough for a 50 basis point rate cut. Fed Fund futures are now pricing in just under 100 basis points of interest rate cuts by the end of the year, but that’s still significant. Therefore, we expect the all-time high to be reached and surpassed in the not-too-distant future.”

“Due to clear signs of significant interest rate cuts by the Fed, we have raised our year-end gold price forecast to $2,500 per troy ounce (previously $2,300). The three rate cuts we expect by the end of the year will likely be followed by three more in the first half of 2025. That’s a total of two more rate cuts than we previously expected.”

“Consequently, we expect the price of gold to rise further to $2,600 by the middle of next year. At the end of 2025, the price of gold is likely to fall to $2,550 (previously $2,200) given the renewed rise in inflation and speculation associated with interest rate hikes next year.”