Goldman: "Fed Rate Cuts May Finally Bring Western Investors Back Into Gold Market"

Both gold and silver prices have experienced significant rallies in 2024. With gold trading over $2,500 per ounce, while silver has touched $32.75. 

Yet remarkably, the surge has occurred largely without participation from western investors. 

Instead, it’s been primarily driven by strong buying in China, and the continuation of record-setting central bank purchases. Which has left a stark contrast between what’s happening in the east and the west.

Gold and silver exchange traded funds (ETFs) in the west showed consistent outflows in the first half of the year in 2024. With the ETFs serving as one gauge of the interest in precious metals on the institutional level.

And at the same time, the retail gold and silver dealers have also reported consistent selling over the past year. Particularly from long-term holders looking to cash in profits. A trend was especially pronounced in the silver market as the price surpassed the $30 mark.

However against this backdrop, Goldman Sachs recently issued a report where they mentioned:

"Fed rate cuts may finally bring Western investors into the gold market." 

A comment that’s certainly worth keeping in mind as we move forward in the months ahead.

Gold and silver analysts have spent the past half year wondering when the west is finally going to start participating in the rally. And the Goldman comment, simple as it may be, still identifies what remains one of the higher probability catalysts.

That’s based on an outcome that’s looking increasingly likely to occur.

Because the Fed is getting closer to cutting interest rates. And following Friday’s labor report and Monday’s crash in the global stock markets, the futures are now pricing in a 100% probability of a rate cut by September. 

Along with a 67% probability that the Fed funds rate will be 50 basis points lower by then.

The ETF data showed institutional gold and silver inflows slowly starting to come back to the market in July. And when the rate cuts do arrive, we could soon see even more western institutional and retail money come back into gold and silver.