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According to analysts at BNP Paribas SA, the upcoming key Fed rate cut will raise the price of gold. The yellow metal can break the bar at $1,600 per ounce, analysts say.
Analysts do not rule out that the Federal Reserve will reduce the rate by 0.25% at the upcoming September meeting. This measure is necessary to stop the slowdown in US economic growth and to mitigate the negative effects of the trade war with China.
Gold will benefit from the actions of the Fed if they provide a for a four-time rate cut by 25 basis points between September 2019 and June 2020. Analysts predict the active growth of the yellow metal.
Recall that this year the precious metal significantly rose amid an escalation of the US and China trade conflict, and as a result, the demand for safe haven assets increased significantly. The end of this protracted war is not expected, and the geopolitical situation in the world remains tense. In this situation, the demand for gold will grow, analysts say.
According to the calculations of BNP Paribas SA analysts, the precious metal's price will be at the level of $1560 per ounce next year. The Fed easing monetary policy cycle could push the price of gold to $1,600 per ounce, analysts say. Four rate cuts from September 2019 to June 2020 can lead to the fact that the upper limit of the Fed base rate range will decrease to 1.25%.
On Wednesday, September 4, the yellow metal was trading at $1,540 per ounce. This is 20% higher than the current year, analysts notes. Earlier, the cost of precious metals reached $1555 per ounce at the end of August, which is the highest figure since 2013. However, this is not the limit, analysts who offer bold forecasts for 2020, in which the price of gold exceeds $1,600 per ounce, are certain.
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