Gold started the month at a level of $2,500 per ounce. This price has been maintained since mid-August, when it became certain that the U.S. central bank would cut interest rates in September. And that’s exactly what happened.
However, there was some uncertainty. It was not so much about whether the cut would happen, but whether the rates would be reduced by 25 basis points, or a little more radically, by 50. The latter scenario won, which ultimately translated into a rising trend in the price of gold, during which the historical record was beaten several times.
Shortly after this, the price crossed the $2,600 barrier for the first time, and on September 24th, it set an all-time high (ATH) at $2,640. Records were also broken in Polish złoty. On September 20, the price of gold for the first time in history exceeded the level of 10,000 złoty per ounce. On September 26, an ounce was valued at 10,280 złoty.
Historically, the price of gold usually increased at a time when the Fed was lowering interest rates after a long period. Currently, we have a situation in which most of the world’s major central banks are beginning interest rate reduction cycles, which will result in further increases in the price of precious metals. Analysts from various financial institutions predict a price of $2,700- $2,900 and even $3,000 per ounce (Rosenberg Research) by the end of next year.
The topic that also strongly made its way to the public opinion last month was the upcoming BRICS summit in Kazan. Topics related to the potential expansion of the group to include new countries, the use of local currencies in intra-group settlements, and the introduction of a common gold-based currency will be discussed.
BRICS aims to become a balance for the G7, which currently accounts for 43% of global GDP. This share is to decrease, especially given the fact that countries like India will continue to grow at a rate higher than average, and the BRICS group will be accepting new members.
As for gold reserves, the leader in purchases in the second quarter of the year was the National Bank of Poland, followed closely by the central banks of India, Turkey, and Uzbekistan. Although the latter country is not a BRICS member, it is a very important trading partner of the group. As for Turkey, it applied for membership to the block in early September.
The process of building gold reserves runs parallel to the process of getting rid of U.S. bonds. China is the second-largest holder of U.S. debt (after Japan) and is gradually reducing its exposure.
Inflation in Poland does not relent. Poland has recently been dealing with the topic of floods that hit the south-west part of the country. The final estimates of losses are not yet known, but they are expected to amount to 3-5 billion złoty, part of which will be borne by the state budget.
At the end of September, changes to the draft budget for 2025 were introduced, designed to help secure funds for the reconstruction of flood damages. The budget already had a record high deficit, which, in light of the recent excessive deficit procedure initiated by the European Commission against Poland, raises concerns.
Inflation in Poland is accelerating again. According to the quick reading by GUS for September, it amounted to 4.9% y/y. In July and August it was 4.2% and 4.3%, respectively. Consequently, since the elections, the interest rates of the National Bank of Poland have remained unchanged – the main rate is 5.75%.
Despite a slight correction, the price of gold quoted in Polish złoty, from September 20 to the end of the month, remained at record levels, above the threshold of 10 thousand złoty per ounce.
Source: https://managerplus.pl/zloto-na-rekordowych-poziomach-dzieki-obnizce-fed-86152
