The price of gold surged to a new all-time high of $2,582 per troy ounce on Friday on the back of a weaker dollar and expected rate cuts.

The precious metal is up 3% in the past three days as investors eye the Federal Reserve’s next Federal Open Market Committee meeting 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 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 while offering more appeal to investors looking for assets with higher appreciation potential. Though this isn’t always the case, it appears to be in the lead-up to the Fed’s decision next week.

While it remains unclear if the Fed will cut by 25 or 50 basis points, there is speculation that a larger cut could happen based on strong recent economic data. August’s consumer price index print came in at 2.5%, which is just above the Fed’s long-run target of 2%.

Between inflation being the lowest in three years, August’s job report being stronger than July’s and wholesale prices, as measured by the producer price index, only increasing by 0.2% last month — in line with analysts’ expectations — the Fed is now equipped with sufficient data to make a sizable cut to the effective federal funds rate.

The result could be ongoing bullishness for gold, which is already up 35% this year and outperforming the S&P 500 by 17% in 2024. Investors who want to gain exposure to gold can do so by purchasing the physical metal through online dealers or buying shares of gold miner stocks or gold-themed ETFs.

More from Money:

This Stock Market Stat Has Predicted 83% of Presidential Elections in the Past Century

7 Best Gold IRA Companies of 2024

Grocery Stores Have Hiked Prices Beyond Inflation — and Their Stocks Are Soaring

According to a recent report from Money.com, the price of gold has reached a new all-time high of $2,582 per troy ounce. This surge in price is attributed to a weaker dollar and expectations of rate cuts. The precious metal has seen a 3% increase in the past three days, with investors closely watching the upcoming Federal Open Market Committee meeting on Tuesday and Wednesday. It is widely anticipated that the Federal Reserve will cut its benchmark interest rate by up to half a percentage point.

Gold has historically had an inverse relationship with interest rates, meaning that as rates decrease, the price of gold tends to rise. This is due to the fact that as yield-producing assets lose their appeal, investors turn to assets with higher potential for appreciation, such as gold. While this is not always the case, it seems to be the trend leading up to the Fed’s decision next week.

There is speculation that the Fed may make a larger cut based on recent strong economic data. The consumer price index for August came in at 2.5%, slightly above the Fed’s target of 2%. Additionally, the job report for August was stronger than July’s, and wholesale prices only increased by 0.2%, in line with expectations. With this data in hand, the Fed may be inclined to make a significant cut to the effective federal funds rate.

This could result in continued bullishness for gold, which has already seen a 35% increase this year and has outperformed the S&P 500 by 17%. Investors looking to gain exposure to gold can do so by purchasing physical gold through online dealers or by investing in gold miner stocks or gold-themed ETFs.

It is important to note that not all brands are included in this report, and the research and financial considerations of our partners may influence how brands are displayed. To learn more about this topic, visit Money.com. Additionally, it is worth noting that grocery stores have recently hiked prices beyond inflation, leading to a surge in their stock prices. According to SEO standards, this information is being reported in accordance with journalistic standards. 

Source:Read More