Precious Metal Milestone: Gold Soars Above $4,000 for the First Time
The price of gold shattered a historical ceiling on Tuesday, breaching the $4,000 per ounce mark for the first time ever.
This dramatic surge in the metal’s valuation is being fueled by a confluence of factors, including a softening U.S. dollar, heightened anticipation of further Federal Reserve interest rate cuts, and robust procurement by central banks and money managers looking for a bulwark against intensifying geopolitical and economic instability.
Contracts for the precious metal traded on the Commodity Exchange (COMEX) were hovering near $4,005 an ounce shortly after punching through the psychological $4,000 threshold. This represents an intraday gain of approximately 0.7% and a phenomenal year-to-date appreciation exceeding 50%.
This blistering pace marks gold’s most significant calendar-year advance since 1979.
The year-long rally has largely mirrored the decline of the U.S. Dollar Index, which has depreciated by around 10%. As the greenback has weakened and global policy and trade tensions have escalated, investors have flocked to assets perceived as reliable stores of value.
The appeal of the lustrous metal as a defensive asset was underscored by Ray Dalio, the founder of Bridgewater Associates. In an interview on Tuesday, Dalio characterized gold as the “one asset that does very well when the typical parts of your portfolio go down.”
He went on to recommend that investors consider dedicating “something like 15%” of their total portfolio holdings to the metal.
The latest leg of gold’s ascent follows the Federal Reserve’s rate reduction in September. Market observers are now betting on two more reductions before the close of the year. The benchmark federal funds rate is currently set within a target range of 4.00% to 4.25%.
The central bank’s next policy-setting meeting is slated for October 29.
Beyond typical institutional investors, both sovereign wealth managers and individual buyers have aggressively moved into gold.
Notably, China has been cited among the major purchasers. The World Gold Council confirmed this trend, reporting record quarterly inflows into gold-backed exchange-traded funds (ETFs).
According to the Council, global ETF inflows ballooned to $26 billion during the three months concluded in September, while the average daily trading volumes for the metal concurrently spiked.
