Gold Hits $4,000 for First Time

Gold Hits $4,000 for First Time

The News

Gold prices hit $4,000 for the first time Tuesday as investors seek a safe haven from a weaker dollar, geopolitical volatility, economic uncertainty and stubborn inflation.

Gold futures closed at a record $4,004.40 per ounce, after hitting an intraday all-time high of $4,014.60. Prices have about 50% this year as the U.S. dollar index has dropped 10% and President Donald Trump upends the global trade system and threatens the independence of the Federal Reserve.

Timeline

September

The latest leg higher in the precious metal came after the Fed cut interest rates in September for the first time this year, making short-term debt instruments like Treasury bills less attractive to investors.

Reactions

Ray Dalio, founder of Bridgewater Associates, recommended Tuesday that investors put “something like 15% of your portfolio in gold.” Debt instruments are “not an effective store of wealth,” Dalio said at the Greenwich Economic Forum in Connecticut.

Gold is “the one asset that does very well when the typical parts of your portfolio go down,” he said.

Bank of America urged investors on Monday to approach gold cautiously as prices headed toward $4,000. BofA warned clients that gold faces “uptrend exhaustion,” which could lead to “a consolidation or correction” in the fourth quarter.

What's Next

The market is expecting two more reductions in the fed funds rate, now 4.00% to 4.25%, before year-end. The Fed next meets in three weeks, on Oct. 29.

More

Central banks and retail investors are buying gold at a rapid pace. China and other countries are diversifying away from U.S. Treasurys and into gold after Washington imposed stiff sanctions on Russia over its invasion of Ukraine in 2022, and retail investors are looking for protection against inflation.

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