This week, gold prices stabilized above the significant $2,500 price per ounce mark as traders anticipate the Federal Reserve’s next steps. The prevailing expectations that the Fed will begin easing monetary policy with a 25-basis-point rate cut in September are supporting the gold markets.
The price of gold has significantly increased over the past year. It went from around $1,900 per ounce in Sept. 2023 to over $2,500 in August 2024, more than a 30% increase in just a year.
U.S. Treasury yields fell, fostering the appeal of non-yielding precious metals amid these rate-cut bets. Moreover, the geopolitical tensions and concerns over China’s economic challenges provide a solid backdrop that favors gold buyers.
Investor interest in gold is further evident by the rise in holdings of the SPDR Gold Trust – the world’s largest gold-backed exchange-traded fund, which reached a seven-month high.
Despite this, investors remain cautious. The recent release of the FOMC minutes, which investors had hoped would clarify the Fed’s intentions, offered no definitive commitment to a rate cut in September. This uncertainty has kept gold prices volatile, hovering just above the $2,500 mark.
Attention is now shifting to Fed Chair Jerome Powell’s upcoming address at the Jackson Hole Symposium, scheduled for Aug. 24 to 26, where he may reveal a more definitive commitment to a 25-basis-point rate cut in September.
James Miller is a Senior Content Writer at McGruff.com. He has a background in investing and has spent most of his career in the financial industry. He can trace his family tree back to the California Gold Rush when his ancestors risked it all to make it big in the west. He feels like he's following in their footsteps as he strives to make sense of today's gold market.
