Exploring the reasons for the continuous rise in gold prices and the setting of historical new highs

Recently, gold is undoubtedly the most shining star in the global financial markets. After the European Central Bank announced the second interest rate cut of the year, by 25 basis points, the price of gold soared, with the international spot gold price (London Gold) breaking through $2580 per ounce, reaching a historic high. The New York Mercantile Exchange (COMEX) gold futures main December contract broke through the $2600 per ounce mark, reaching $2614.6 per ounce, hitting a new all-time high. Will the recent European Central Bank interest rate cut trigger another surge in gold prices, as the Federal Reserve is expected to cut interest rates again soon? Will the price of gold continue to rise? Goldman Sachs believes that the current environment poses risks for most popular commodities, and gold provides the best protection against value depreciation. Goldman Sachs continues to believe that the target price for gold in early 2025 is $2700 per ounce. The continuous rise in the price of gold can be attributed to several reasons. First, the interest rate cut cycle of the US and Europe. The European Central Bank, the Bank of England, the Swiss National Bank, etc. have already cut interest rates, and the Federal Reserve is expected to announce its rate decision on September 19. Once the Federal Reserve begins a cycle of interest rate cuts, it may last for two to three years, leading to a devaluation of the dollar and the euro. As gold is priced in dollars, it naturally appreciates when the dollar depreciates. Second, central banks around the world continue to increase their gold holdings. This has been the fundamental driving force behind the rise in gold prices in recent years, as countries fear being sanctioned by the United States. Increasing gold reserves and reducing the proportion of dollar reserves have contributed to the continuous rise in gold prices. Third, ongoing geopolitical conflicts. The conflict between Russia and Ukraine has been ongoing for three years, with signs of escalation recently. The Middle East conflict shows no signs of abating. In times like these, both institutions and individuals seek to hold a certain amount of gold as a safe haven. The fundamental reasons for the continued rise in gold prices lie in unrestrained money printing, persistent geopolitical conflicts, and central banks' actions to weaken the dominance of the dollar by increasing gold reserves. There are four major factors that can drive the rise of A shares: First, the continuous growth of China's economy. This is the kind of economic recovery that we can feel, not just based on economic data alone. Second, the Federal Reserve's interest rate cut. The timing of the Federal Reserve's interest rate cut has been discussed since the beginning of the year, and the market's expectations for the timing of the rate cut have been repeatedly delayed. This time, it can be said that the dust has settled, but the extent of the interest rate cut is still unknown. Third, unexpected economic and financial stimulus policies. Continuous stimulus policies may not easily "stimulate" the market unless there are truly major positives. Fourth, easing of geopolitical conflicts. Currently, geopolitical conflicts are intensifying, with no sign of easing.