Copy article

Gold hits new all-time high

ended 13. September 2024

The price of gold has hit a new all-time high this morning. A few Qs:

  • What's causing this spike? Does this signal that markets believe a 0.5% cut is more likely by the Fed?
  • Is there more upside potential for gold or is now a bad time to buy/invest in it?
  • What other asset classes could benefit if rates continue to drop?

5 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Anita Wright
Independent Financial Adviser at Ribble Wealth Management
While a 0.25% cut seems almost certain in September, there's a possibility that the US Federal Reserve might go for a 0.5% cut if the data or geopolitical risks worsen. If the stock market suffers a deeper decline or global risks escalate, a larger cut could become more likely. The data points in favour of gold are endless: the Fed is going to start cutting rates, the dollar is getting weaker, you've got two areas of the world with ongoing military conflict, Ukraine and the Middle East, and fiscal deficits are just getting higher and higher. That's always great for gold. Lower rates increase the appeal of bonds, particularly longer-term Treasuries, as investors seek yield. Other commodities, like silver, could see gains. A weaker dollar and lower U.S. rates could support emerging markets, especially those that rely on dollar-denominated debt as a falling dollar reduces the burden of that debt, which could boost equity and bond markets in these regions.
Copy

Editor
Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
Beware the gold rush. The anticipation of lower borrowing costs has been a critical driver of gold's recent rally, as a weaker dollar typically boosts the appeal of gold as a hedge against currency devaluation. However, the bullish sentiment surrounding gold is tempered by looming downside risks. Buying gold at these elevated levels could expose investors to corrections, especially if the US Federal Reserve's anticipated rate cuts are less aggressive than expected. Despite its appeal, gold's glitter turns to gloom when you buy at the peak, so beware these elevated prices.
Copy

Premium
David Belle
Founder and Trader at Fink Money
The Chicago Mercantile Exchange has just introduced micro gold futures.

If the CME is inducing more retail flows in, combined with the fact every time gold has had a similar year-on-year change, you can trade against this dynamic.

Playing contrarian against heightened uninformed flow is the way to go, and bearish for gold here.
Copy

Riz Malik
Independent Financial Adviser at R3 Wealth
Although a jumbo rate cut by the Fed is unlikely, the consensus is that their rate-cutting cycle will involve consecutive reductions. Those seeking greater yields will look to other asset classes, equities included, which are expected to benefit on both sides of the pond.
Copy

Mark Scott
Director and IFA at Positive Advisers Ltd
US inflation data today makes it easier for the Fed to cut rates more strongly. I would expect to see equity valuations move upwards as rates come down. Investors happy with elevated risk-free returns will seek to maintain these returns by moving into risk assets.