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Key Takeaways
- The spot price of gold hit $2,465.65 per ounce Monday afternoon, a record high.
- The increase comes as markets are pricing in a high likelihood of potential interest-rate cuts from the Federal Reserve starting in September. Lower rates are sometimes viewed as bullish for gold.
- Gold has been one of the strongest-performing assets of 2024 overall.
Gold prices hit a record high Tuesday as investors looked ahead to the possibility of interest-rates cuts starting this fall.
The spot price of gold reached $2,465.65 an ounce, a record high, by Tuesday afternoon, according to LSEG data going back to 1968, per CNBC. Gold futures were recently up 1.7% to about $2,470 an ounce.
Attention to gold has ratcheted higher in recent weeks after cooler-than-expected inflation in June fueled expectations that the Federal Reserve would lower its benchmark interest rate in September.
The prospect of lower interest rates is sometimes seen as bullish for gold since the precious metal, which doesn’t pay a dividend, can appear more attractive relative to other assets, like Treasurys, in such an environment. Investors may also be turning to gold as a hedge against economic and geopolitical uncertainty.
Gold Among Top-Performing 2024 Assets
The CME FedWatch Tool, which estimates the likelihood of interest rate changes based on 30-day fed funds futures, now shows that traders view a September cut as exceedingly likely, with additional reductions expected to follow.
Gold has been one of the best-performing global assets so far in 2024, with central banks playing a major role. Global official gold reserves increased by 290 metric tons in the first quarter of this year, the largest first-quarter increase since at least 2000 and 69% higher than the five-year quarterly average, according to the World Gold Council.