Golds hitting new records again Heres what it means for the economy CNN Business

Recent gains for the precious metal are largely credited to ongoing economic uncertainty, geopolitical tensions and strong demand from central banks around the world. When investing in gold, the investor is faced with the opportunity cost of gold – a non-interest bearing asset. The higher the US interest rate for holding US dollars or investing in Treasuries, the higher the opportunity cost of holding gold. It is more likely, Quantitative trading strategy therefore, that a rally in the price of gold will be forecasted the lower the US benchmark interest rate. Historically, however, the price of gold is not tied to the fluctuations of stock and bonds. This is one of the chief reasons when one should have gold in their portfolio – to protect the long-term value of your investments.

More Gold Price Forecasts

Last month, the Fed cut interest rates for the first time in more than four years. The chances of an additional quarter-point rate cut next month stand at more than 90%, according to the CME FedWatch Tool, a measure of market sentiment. However, central bank purchases of gold slowed in the middle of this year, the World Gold Council said in July.

Gold Forecast Short Term

Global tensions and evolving trade relationships continue to create market uncertainty. Political transitions in several major economies during 2025 could further influence investor sentiment and drive demand for safe-haven assets. Central bank decisions will play a crucial role, with widespread expectations of rate cuts throughout the year. This monetary easing, combined with sustained central bank gold purchases, could provide significant price support for gold.

big dislocations generating risks for markets right now

• Both retail and institutional investors shouldn’t be influenced by the “FOMO effect,” or fear of missing out, Saliby notes — explaining that people should not risk all their money just because they are seeing others rake in gains.
• As long as the price continues to trade above the uptrend line drawn from the low of June 26, the outlook remains positive.
• What hasn’t changed, in our view, is the strategic value that gold can bring to portfolios.
• Gold prices have long been a barometer of investor sentiment, reflecting concerns about items like inflation, interest rates and global economic stability — and the gold price trends that occurred throughout 2024 are a clear example.
• While some investors might be wary of the price drop, viewing it as a sign of instability, others see it as a potential entry point.
• But when real yields are low or negative, the inflation-adjusted returns on bonds are eroded by inflation.

Investor interest in gold is rising, which isn’t surprising given persistent inflation and elevated interest rates continue to drag on the economy. Historically, gold tends to perform well during periods of economic uncertainty, as investors look for a hedge against inflation and a stabilizing asset to add to their portfolios. JPMorgan Chase researchers said in a note on Monday that they expect the yellow metal to continue running toward their 2025 target price of $2,850 an ounce as the Fed brings down rates.

Potential risks and challenges

Similarly, Eric Croak, CFP and president of Croak Capital, a wealth management firm in Toledo, Ohio, says a “combination of specific factors” have spurred gold’s soaring price, but one factor may weigh more heavily. To be sure, rallies in silver also tend to reflect optimism that the economy will reaccelerate, since it’s a material used in construction of infrastructure and products like electronics, jewelry cross currency definition and example and flatware. “There’s really, at this stage, no way to think about gold other than positively,” said Will Rhind, chief executive of GraniteShares.

Central banks are also bolstering their gold reserves, which could help drive demand and further stabilize prices. Central banks have been consistent buyers of gold, both as a hedge and as a way to diversify their own reserves. Additionally, the industrial sector’s need for gold — particularly in electronics and medical devices — has remained robust, adding further demand. All these factors point to a positive long-term outlook for gold, making now a favorable time to invest, especially at a lower price.

• Fresh consumer confidence data on Tuesday indicated that Americans are feeling pessimistic about the US economy and future of the job market.
• It is more likely, therefore, that a rally in the price of gold will be forecasted the lower the US benchmark interest rate.
• Once Trump’s foreign and economic policies take shape, Gold’s outlook will become less cloudy.
• “Let’s start macro, gold is your safety play, so the more people feel nervous or uncertain, the more gold is viewed as a safe haven,” says Matt Willer, a Phoenix Capital Group Holdings partner in Denver, Colorado.
• However, the safe keeping of gold at banks usually gives rise to considerable costs which are not incurred when securities are traded.
• Rick returned to mining but faced unexpected challenges in getting his operation back up and running.

West Texas Intermediate Oil price halts its six-day losing streak, trading around $74.40 per barrel during the Asian hours on Friday. Crude Oil prices are on track for a weekly decline after US President Donald Trump announced a comprehensive plan to increase US production and called on OPEC to lower crude Oil prices. Recent stimulus measures in China aimed at boosting consumer spending are also expected to up retail investments, Saliby added, further boosting gold’s performance. Among sources of uncertainty today are geopolitical tensions — which escalated over recent days with Israel’s deadly strikes in Lebanon. And the ongoing wars in Gaza and Ukraine have continued to fuel fears about the future worldwide.

The 52-week gold price high is $2,788, while the 52-week gold price low is $1,471. Compared to last week, the price of gold is up 1.78%, and it’s up 5.29% from one month ago. China ranks atop the list of nations seeking to bolster their gold reserves hammer candlestick formation in technical analysis as a means of reducing its dependence on the U.S. dollar.