Gold prices continued their upward trajectory, reaching a new peak of $2,480 per ounce during Wednesday’s Asian trading session. This surge was driven by increasing confidence among traders who bolstered their long positions amid expectations of forthcoming interest rate cuts by the Federal Reserve. The optimism surrounding these cuts was fueled by a series of positive economic indicators and Federal Reserve Chairman Jay Powell’s optimistic remarks on inflation. Powell indicated on Monday that the Fed is satisfied with the downward trend of inflation, reinforcing expectations that the central bank might reduce borrowing costs as early as September, ahead of previous forecasts which had suggested December.
The renewed confidence in an impending rate cut has revitalized interest in gold, which is traditionally favored both as a safe-haven asset and due to its historical performance in low-interest-rate environments. This new record high for gold follows closely on the heels of its earlier peak of $2,440 per ounce a few months ago, despite a temporary pullback to $2,290 per ounce, representing a 6.5% decrease.
In response to these developments, prominent investor and known advocate for gold investments, Ray Dalio, founder of Bridgewater Associates, emphasized gold’s attractiveness as an under-owned asset that provides effective diversification benefits. Speaking to CNBC on Tuesday, Dalio recommended that every investor should hold gold in their portfolio, suggesting it as a prudent strategy to hedge against market uncertainties. He stated, “Gold is an effective diversifier, meaning that if you take the classic mix of assets, and you encounter a particular problem, an optimal portfolio would have something more than about 10% in it.”
These remarks underscore the growing sentiment among investors and traders towards gold as a strategic asset amid evolving economic conditions and Federal Reserve policy expectations.
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