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Influenced by the expectation of the Federal Reserve's interest rate cut, gold entered record-breaking mode, breaking through the $2,500 per ounce mark.

Gold has risen 21% so far this year, making it one of the best-performing major commodities through 2024. Banks including UBS and ANZ say there is still room for further gains.

Gold prices are “heading towards $2,700 an ounce by around the middle of 2025,” said Wayne Gordon, commodities strategist at UBS Global Wealth Management in Washington, citing a shift by the Federal Reserve, central bank buying and portfolio hedging needs.

Fed Chairman Jerome Powell is set to provide clues on the outlook for monetary policy at the Jackson Hole symposium later this week, and the chart below outlines some of the key drivers of gold’s outlook:

Real interest rate

Gold’s recent surge has been fueled in large part by expectations that U.S. policymakers will soon start cutting interest rates, which are expected to happen at next month’s policy meeting. That talk has dragged real interest rates lower, creating a more favorable environment for gold.