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Spot and futures gold prices hit record highs on Friday as the latest release of the US housing starts in July was weaker than expected, adding to concerns about the downside risk to the US economy.
Shortly before 10 a.m. ET, spot gold broke above $2,500 an ounce for the first time, and after retreating to an intraday low of $2,479 an ounce, the price broke above $2,500 by the end of the afternoon, trading at $2,509.42 an ounce, up 2.15 percent from the previous session.
Bob Haberkorn, senior market strategist at RJO Futures, believes that disappointing data on the U.S. housing market has reinforced expectations of further interest rate cuts by the Federal Reserve, which is a reason for gold to rally. The weak housing data is another indicator that a recession is coming, and the market believes the Federal Reserve will cut interest rates sooner, and may be more than previously expected.
Phil Carr, head of gold and silver trading at FXEmpire, said gold has been in an unstoppable rally since October, hitting a series of record highs from levels near $1,800. Gold is up more than 26 percent since mid-February and has surged more than 38 percent since October.
The latest Kitco News weekly Gold survey shows that the vast majority of industry experts and retail investors believe that gold prices will further break through from the all-time high of $2,500.
Adrian Day, president of Adrian Day Asset Management, said gold prices are at an all-time high and upcoming economic data or speeches by Federal Reserve officials could dampen expectations of multiple rate cuts this year, putting pressure on precious metals prices, but only in a very short period. There is almost no doubt that the Federal Reserve will cut interest rates in September, and many banks around the world have entered the interest rate cut cycle, which will support the precious metal rising further.
He pointed out that gold prices may move sideways next week, gaining a foothold at $2,500, and it is difficult for prices to continue to rise to $2,600 in the short term. However, it is expected that after the Federal Reserve’s first interest rate cut, gold prices will have a rapid rise.
Of the nine analysts who participated in the Kitco News gold survey, five (56%) expect gold prices to rise in the coming week, three (33%) believe prices will consolidate their gains next week, and only one (11% of the total) predicts a decline.
Meanwhile, out of 219 retail investors who participated in Kitco News’ online poll, 130 investors (59%) expect gold prices to rise next week, 44 investors (20%) expect gold prices to move lower, and 45 (21%) expect gold prices to move sideways in the coming week.
