(LifeSiteNews) — Gold jumped to a record price of $2,220.89 in early trading this week before retreating Thursday, amid foreign governments buying up more of the precious metal to brace for changing economic conditions and expectations that the U.S. Federal Reserve will cut interest rates.
Bloomberg reports that gold’s price set a new record, rising 1.6 percent before dropping 0.9 percent, continuing an overall rise of almost 10 percent over the past month. The news follows China and other central banks stocking up on gold, and is considered particularly noteworthy that higher prices have persisted despite high interest rates.
Fortune explains that investors had expected Federal Reserve Chair Jerome Powell to tease a continuation of high interest rates; instead he announced at a press conference this week that the data hasn’t “really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road towards 2%.”
This “dovish surprise” has “boosted the attractiveness of holding gold as an asset” through lower borrowing costs, according to TradeStation senior market analyst David Morrison.
Opinions are divided as to how much more attractive it will become for how long. Morrison warns that precious metal investors “should be prepared for a profit-taking pullback which may take the gloss off the latest move higher,” while Bank of America analysts say gold remains “one of our favorite trades for 2024. More investors could enter the market if yields fall and could help push the gold price to Paul Ciana’s potential long-term upside [target] around $2500-$2600.”
“What we saw last night was the green light really for gold traders to come back in,” said Chris Weston, head of research for Pepperstone Group Ltd. Marcus Garvey, head of commodities strategy at Macquarie Group Ltd., added that he considers a gold price as high as $2,300 a “reasonable target… I think the Fed not taking the opportunity of recently firmer inflation to lean hawkish at their meeting yesterday means gold is now going into a short-term overshoot scenario.”
Many consider investing in gold a key measure for economic security against not only the economic harm of inflationary government spending, but the international trend of central bank digital currencies potentially making individuals’ ability to provide for their families contingent on systems that could be used to more easily track or restrict individuals’ movements, invade their privacy, and limit their economic choices, eventually with the potential to even make the ability to pay for anything contingent on compliance with the ideological values of those in power.
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