On October 21, gold futures on the New York Mercantile Exchange closed at $2,734.50, continuing to reach new all-time highs.

As one of the world’s primary safe-haven assets, gold has risen by over 30% so far this year. This increase mainly reflects the fact that major global economies have entered an interest rate-cutting cycle due to weakened economic outlooks. In addition, rising tensions in the Middle East and uncertainty surrounding the U.S. election have further driven gold prices upward.

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Interest rates are a key factor in the pricing of all assets, but they are especially important for gold, as it does not provide interest or dividend income. As a result, gold’s price is highly sensitive to interest rate fluctuations.

The real interest rate (nominal interest rate minus inflation) is the key factor influencing gold prices. Typically, when real interest rates rise, gold’s attractiveness decreases relative to higher-yielding assets, leading to a drop in its price. Conversely, when real interest rates fall or turn negative, gold’s appeal as a safe-haven asset increases, pushing its price higher.

According to economic forecasts from major central banks, global interest rates are expected to decrease by 75 to 125 basis points by 2025. Therefore, the upward trend in gold prices is likely to continue through 2025.

(Source: Fed, ECB, BOE, RBA, S&P Global, TrendForce)

The Fed announced a 50-basis-point rate cut last week, sparking expectations of further rate reductions and driving gold prices to new highs. On the 23rd, gold prices surged to an all-time high.

On September 23, gold futures on the COMEX, the world’s largest gold futures exchange, soared to a record high of $2,653 per ounce. This marks a roughly 30% increase in gold prices compared to the start of the year, with prices setting new records throughout the year.

Following the Fed’s announcement of a 50-basis-point cut in the benchmark interest rate last week, both spot and futures gold prices, which were already on an upward trend, reached new historic highs. In addition, rising geopolitical tensions in the Middle East have further fueled gold’s rally.

The decline in interest rates is likely to support continued increases in gold prices, and market expectations that the Fed will maintain its rate-cutting pace suggest that gold prices may continue to grow in the near future.

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