Gold prices hit fresh record highs ahead of Fed decision; copper retreats
Investing.com - Analysts at Commerzbank have lifted their forecast for gold prices by the end of the year, citing predictions for "slightly more" future Federal Reserve interest rate cuts than markets are currently pricing in.
In a note to clients, the analysts led by Carsten Fritsch said they now expect gold prices to stand at $3,600 per troy ounce this year and at $3,800 by the conclusion of 2026 -- $200 more than their initial outlook, respectively.
On Tuesday, gold touched a fresh all-time peak, nearing $3,700 per ounce, bolstered by a weaker U.S. dollar prior to the Fed’s upcoming decision on Wednesday.
By 07:01 ET, spot gold had jumped by 0.4% to $3,694.73 per ounce. U.S. gold futures for December moved up by 0.4% to $3,732.10/oz. Bullion jumped 1% in the previous session, surpassing record levels notched last week.
The rally was underpinned by widespread market belief that the Fed -- keen to buoy a softening labor market depsite signs of sticky inflation -- will deliver a 25-basis-point rate cut at the end of its September 16-17 meeting, its first since December 2024. Lower rates tend to benefit gold and metals, given that they lower the opportunity cost of investing in non-yielding assets over government bonds.
Policymakers are tipped by Commerzbank to roll out 75 basis points (bps) of rate reductions over the rest of the year and a further 125 bps in cuts in 2026 -- marginally above the level indicated by Fed Funds Futures. Interest rates now stand at a target range of 4.25% to 4.5%.
The U.S. dollar also exchanged hands near one-week lows, adding further support.
Meanwhile, political developments in Washington bolstered metal’s safe-haven appeal. The Senate confirmed Stephen Miran, Trump’s economic adviser, to the Fed Board of Governors. Investors viewed the appointment as a sign that the central bank could face stronger pressure to align with White House policy.
Separately, a U.S. appeals court blocked President Donald Trump’s attempt to remove Fed Governor Lisa Cook, meaning she would likely attend this week’s Fed meeting. President Trump is expected to take the matter to the Supreme Court.
Silver is also likely to benefit from the upward trend in gold, the Commerzbank analysts predicted, saying this is likely due to "the fact that the already high gold price is deterring some investors, who are therefore looking for cheaper alternatives."