The gold futures price hit a new record high of US$2,591.6 per ounce before easing back amid the United States Federal Reserve cutting interest rates by 50 basis points.
The rate cut was larger than expected and the first one since early 2020.
According to an analysis by Trading Economics, the rate cut has increased investors' appetite for gold "by reducing the opportunity cost of holding non-yielding assets".
The gold price has been on a tear since late February when it was trading at about US$2,034 per ounce.
The commodity is currently trading at US$2,589 per ounce, down 0.37%.
So, where to from here?
Westpac Senior Economist Justin Smirk has published his latest forecasts.
Gold price forecasts from here til September 2028
In his latest commodities forecasts (published prior to the US rate cut), Smirk predicted that the gold price would average US$2,530 per ounce in the December 2024 quarter.
He foresees a further gradual rise in the gold price to reach an average of US$2,600 per ounce in the December 2025 quarter.
Beyond this, Smirk sees the gold price continuing to rise to US$2,680 per ounce in the December 2026 quarter and US$2,770 per ounce in the December 2027 quarter.
His forecast runs through to the September 2028 quarter, when Smirk expects the gold price to average US$2,840 per ounce.
Why did the US Fed cut interest rates?
The US Fed is targeting maximum employment and inflation of 2% over the long term.
In a statement, the Federal Reserve said:
The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.
The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent.
What's happening with ASX gold shares today?
The S&P/ASX All Ordinaries Gold Index (ASX: XGD) is down 0.033% to 8,557.4 points, while the benchmark S&P/ASX 200 Index (ASX: XJO) is up 0.3% to 8,166.5 points at the time of writing.
Meantime, ASX gold shares are putting in a mixed performance today.
Here's how the largest ASX gold stocks by market capitalisation are performing:
- Northern Star Resources Ltd (ASX: NST) shares are down 0.63% to $15.71
- Newmont Corporation CDI (ASX: NEM) shares are down 0.16% to $78.72
- Evolution Mining Ltd (ASX: EVN) shares are down 0.9% to $4.41
- Perseus Mining Ltd (ASX: PRU) shares are up 1.76% to $2.60
- De Grey Mining Limited (ASX: DEG) shares are up 2.39% to $1.29
