Gold prices continued to consolidate around the $1,500-per-ounce support level, closing the week at $1,503.30 per ounce (see the following chart). This consolidation could provide support for another surge upward in gold prices.

The Federal Reserve lowered interest rates by a quarter of a percentage point this month, its second cut since late July. The Fed further suggested it was prepared to move aggressively if the U.S. economy showed additional signs of weakening.

As for the rest of the year, a growing number of Fed officials expect one more cut, based on economic projections released after the Fed’s two-day meeting. These cuts in interest rates will weaken the U.S. dollar and, conversely, strengthen gold.

More importantly, they will align the Fed with the global trend of central banks who are not only lowering interest rates but, in some cases, producing negative-interest-rate environments.

Yahoo Finance reports that gold could rise above $2,000 in the next two years, according to Citi’s research commodities director Aakash Doshi. Says Doshi, “We think this theme of central bank convergence, of very low rates, a very accommodative monetary policy and potentially even negative real rates persisting for a long time is a benefit for gold.”

Rick Andrews is president of Avant Capital Management.