Gold prices surged past the $2,600 mark for the first time on Friday, driven by expectations of additional US interest rate cuts and escalating tensions in the Middle East.

The precious metal reached a new record of $2,588 per troy ounce on Thursday, following the Federal Reserve’s mid-week cut of 50 basis points. On Friday, prices increased by another 1 percent, peaking at $2,639.40.

Despite offering no interest, gold has seen an increase of nearly 4 percent this month and a remarkable 26 percent rise so far this year—the most significant gain since 2010—as investors seek safety amidst ongoing geopolitical conflicts.

Goldman Sachs has predicted that gold prices could climb to $2,700 by early 2025, supported by anticipated interest rate reductions in the US and increased acquisitions by central banks in emerging markets.

However, Commerzbank issued a note indicating that the current gold price rally may not be sustainable in the long run, anticipating only 25 basis point cuts in the Federal Reserve’s next two meetings.

Ryan McIntyre, a senior portfolio manager at Sprott Asset Management, expressed a positive outlook on gold, noting its under-ownership in Western markets and its role as a hedge against various fiscal challenges.

According to McIntyre, gold’s advantages extend beyond just rate cuts; it will also gain from the ongoing devaluation of the US dollar, the unstable fiscal circumstances of numerous Western nations, and the global demand for reliable stores of value that are independent of other assets and institutions.

India recently reported record gold imports, reaching a dollar value of $10.1 billion in August, highlighting the strong demand for the metal.

Since the onset of the conflict in Ukraine in 2022, central banks have been acquiring gold at about three times their previous rate. The Chinese central bank has significantly increased its physical gold reserves over the last two years, with a net purchase of 7.23 million ounces in the last year, according to the World Gold Council.

Alex Ebkarian, COO of Allegiance Gold, emphasized that the market is anticipating larger rate cuts due to ongoing fiscal and trade deficits, which are expected to further devalue the dollar. He noted that the confluence of geopolitical risks, low yield environments, and a weakening dollar significantly contributes to the current gold price rally.