Gold futures are rising ahead of a hoped-for interest rate cut by the Federal Reserve.
A rate cut would cut the value of the dollar, making gold a better store of value.
Much will depend on the July consumer price index (CPI), which is due to be released at 8:30 a.m. on Aug. 14. The CPI will drive the Federal Reserve’s decision on an interest rate cut, now widely expected in September.
As the market opened today, gold futures were trading at $2,282. The strike price for gold was $2,444. The gold price is up by about 25% in 2024.
Why Gold Now?
Gold has been seen as a safe investment over centuries. However, it lost some of its appeal during the Covid-19 crisis. It also faces competition from Bitcoin (BTC-USD), whose appeal is based on its limited supply.
Global instability and market volatility always raise interest in gold. If the dollar falls, due to inflation worries or the coming election, that could also boost gold prices.
Analysts note geopolitical risks, including the possibility of a broader war in the Middle East and escalations in Eastern Europe, could raise the price.
Right now, the risks seem balanced. But goldbugs continue to insist the metal is a great long-term investment. While gold is down over the last week, it has gone from under $500 per ounce to nearly $2,500 per ounce in this century.
Gold miners are another way to play the metal’s price. Fellow InvestorPlace contributor Josh Enomoto recently touted seven gold miners, noting that they act as inflation hedges.
However, not all gold stocks are created equal. Skeena Resources (NYSE:SKE), which has a new mine in British Columbia, is up 32% this year. That is three times the gain of industry leader Newmont Mining (NYSE:NEM), which has extensive holdings in Australia.
Gold Prices: What Happens Next?
Expect more volatility despite inflation easing as investors continue to search for safe havens against actions by central banks and governments worldwide.
On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
