Goldman Sachs: If the Federal Reserve cuts interest rates by 25 basis points this week, gold prices may face a slight correction in the short term

Goldman Sachs predicts that if the Federal Reserve chooses to cut interest rates by 25 basis points this week, gold may face a slight pullback in the short term. However, it will then reach new record highs driven by capital inflows into gold ETFs.

Goldman Sachs analysts Lina Thomas and Daan Struyven pointed out in their report that "The Fed's rate cuts will drive Western funds back into gold ETFs, a factor that has been largely absent during the past two years of significant gold price increases." They reiterated Goldman Sachs' prediction, expecting the price of gold to rise to $2,700 per ounce early next year. Goldman economists predict that the Federal Reserve will cut interest rates by 25 basis points on Wednesday. Under this basic forecast scenario, there might be some tactical pullbacks in gold prices but they expect as the Fed begins an easing cycle, Gold ETFs will attract gradual capital inflows which would push up gold prices.