Gold price may hit $4,000 by year-end: Fidelity

Gold prices could be heading towards $4,000 per oz. by the end of this year as the Federal Reserve begins to cut rates and the U.S. dollar continues its decline, according to Canadian investment firm Fidelity.

In an interview with Bloomberg on Tuesday, fund manager Ian Samson said his firm is still bullish on the precious metal, with some cross-asset portfolios recently increasing holdings after prices eased from the all-time high of $3,500 set in late April.

It became more evident the Federal Reserve would ease monetary policy while diversification often occurs when summer holidays weaken some markets, Samson said. 

Bullion is one of the best-performing assets this year, rising by more than 27%. Driving this rally was U.S. President Donald Trump’s aggressive attempts to reconfigure the global trade landscape, fueling both economic and geopolitical uncertainty among investors.

Tight range

After pulling back from its record high, the yellow metal has traded within a tight range over the past few weeks, with demand for havens cooling a little as some progress in U.S. trade talks eased fears about worst-case scenarios for the global economy.

Tariff threats have spooked markets this year but an outlook of about 15% on U.S. imports — 11% of the economy — hasn’t slowed consumers as much as feared, he said.  

The bullish outlook for gold mirrors that of Goldman Sachs, which has made the case in recent quarters for an eventual rally to as much as $4,000. Meanwhile, others like Citigroup are being more cautious, with forecasts of weaker gold prices.

On Tuesday afternoon, spot gold rose slightly to $3,328.78 per oz. after falling to a three-week low the previous session.

Fed meeting

All eyes are now on this week’s Federal Reserve meeting, which is not expected to yield a rate cut.

The Federal Reserve is increasingly divided, with a minority—led by Gov. Christopher J. Waller and Gov. Michelle W. Bowman (both Trump appointees) —arguing for an immediate interest rate cut to support a cooling labour market.

But most Fed officials, including Chair Jerome H. Powell, are leaning toward holding rates steady for now, citing the need for clearer signs that inflation is firmly under control before easing policy.

Powell — whose term as chair ends next May — will probably be replaced by someone more likely to lower borrowing costs as Trump continues to lobby for interest-rate cuts, Samson said.