The price of gold rose to $4,000 Tuesday, the highest price has ever reached. File Photo by Anatoli Zhdanov/UPI | License Photo
The price of gold rose to $4,000 for the first time ever Tuesday, as investors seek more stability.
Gold futures traded at $4,006 around 11 a.m. EDT before dropping a bit and then recovering. The precious metal is up 50% for the year.
The U.S. dollar index has dropped 10%, and the rate of inflation is 2.9%, above the Federal Reserve’s 2% target.
The Fed cut interest rates in September for the first time this year, making short-term debt instruments like Treasury bills less attractive and boosting gold, CNBC reported.
The market expects two more reductions to the federal funds rate by the end of the year. The rate is now at 4% to 4.25%, with the Fed meeting next on Oct. 29.
Central banks and retail investors are buying gold at a brisk pace.
China and other countries are moving away from U.S. Treasuries and into gold after the Trump administration added sanctions on Russia over its invasion of Ukraine in 2022. Retail investors are looking for protection against inflation, CNBC reported.
Ray Dalio of Bridgewater Associates told investors Tuesday to put “something like 15% of your portfolio in gold.”
Debt instruments are “not an effective store of wealth,” he said at the Greenwich Economic Forum in Connecticut, CNBC reported he said, before adding that gold is “the one asset that does very well when the typical parts of your portfolio go down.”
Bank of America has urged more caution on gold, warning clients that gold faces “uptrend exhaustion,” which could mean “a consolidation or correction” in the fourth quarter.
Costco and Walmart are selling gold bars, and they report that they continue to sell out. Costco began selling gold in 2023, but it has struggled to keep up with demand, USA Today reported.
Gold bars have made a 100% gain for those who bought them when they first went on sale and more than 50% gain from one year ago.
