Gold Price Soars to New Record High as Central Banks Signal Rate Cuts
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Gold Soars to New High: What’s Behind the Rise?
The price of gold has surged to a new all-time high of $2,582 per troy ounce, driven by a weaker dollar and expected rate cuts.
Interest Rate Cuts Boost Gold Demand
The precious metal is up 3% in the past three days as investors eye the Federal Reserve’s next Federal Open Market Committee meeting on Tuesday and Wednesday, when the U.S. central bank is expected to cut its benchmark interest rate by as much as half a percentage point.
Gold and Interest Rates: A Correlation
Gold historically has an inverse relationship with interest rates – as rates fall and yield-producing assets lose some of their luster, the price of gold tends to rise, offering more appeal to investors looking for assets with higher appreciation potential.
Fed Decision: A Potential Game-Changer
While it remains unclear if the Fed will cut by 25 or 50 basis points, speculation suggests a larger cut could happen based on strong recent economic data, including a 2.5% consumer price index print and a strong job report.
Ongoing Bullishness: What’s Next?
The result could be ongoing bullishness for gold, which is already up 35% this year and outperforming the S&P 500 by 17%. Investors can gain exposure to gold by purchasing physical metal or buying shares of gold miner stocks or gold-themed ETFs.
