Gold prices continue to skyrocket, closing last week at another record high, as several factors help boost the precious metal which has actually outperformed the blistering stock market in 2024.Spot gold prices ended Friday at a new record of $2.622 per troy ounce in New York, according to FactSet data, extending its year-to-date gain to 27.1%, topping the U.S. benchmark S&P 500 stock index’s balmy 20.8% return, including reinvested dividends.
Gold is on track for its best return since 2010, outpacing even 2020’s 25.1% gain as the COVID-19 pandemic The most recent lift to gold prices was the Federal Reserve’s Wednesday decision to institute the first interest rate cut in 4.5 years, which provides a pair of tailwinds for the metal, according to conventional wisdom, as gold prices rose 2% from Tuesday to Friday.
Lower rates of return on other non-stock assets which offer fixed payments tied to the Fed-set interest rates, like short-dated government bonds and certificates of deposit , may make gold a more popular diversification option, and gold is considered perhaps the most popular hedge against inflation, meaning if the Fed acted too swiftly and U.S. inflation gets worse again, gold prices should benefit.
But it’s not just U.S. monetary policy boosting gold, as experts tie the increased appetite for gold to geopolitical risks globally, including from the U.S. election and the ongoing wars between Russia and Ukraine and Israel and Hamas.to Goldman Sachs, which also named concerns over climbing U.S. federal debt and the potential for increased institutional capital into gold exchange-traded funds as a driver of higher gold prices.811%.