Asset Strategies International: Gold Pausing for a Fed Pause

Several asset classes have been volatile over the past two years, but have largely gone nowhere. That includes the stock market, which peaked in late 2021, sank in 2022, and has neared a full recovery this year.

Another asset making a similar move is gold. The commodity rose ahead of inflation expectations in 2020. It briefly moved over $2,000 ounce. Today, it’s just under $2,000 per ounce.

Investors who were right about surging inflation fared well moving into gold three years ago. Today, gold prices remain near their highs as inflation starts to perk up again.

While it may not mean gold soaring to new all-time highs, today’s high gold prices reflect market uncertainty. That may be why sales volume on physical gold buying remains high.

That includes both individual investors picking up fractions of an ounce, as well as central banks buying by the ton.

Meanwhile, prices are most likely to move again based on the next move by the Federal Reserve. The central bank held interest rates steady this week. That helped keep gold prices stable, relative to stocks.

With the rising chance of interest rate cuts next year, inflation pressures may increase further. That could lead to more demand from individual buyers.

To read the full analysis on how you can hedge your investments with gold, click here.