We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. Learn more.

Published: Mar 07, 2024 4 min read

Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.

Photo-illustration of stacked gold bars forming a graph with gold stars in the background.
Olive Burd / Money; Getty Images

The price of gold reached a record high this week, peaking as bitcoin also notched its all-time high and shortly after the S&P 500 crossed 5,000 for the first time.

Spot gold was trading at $2,160 per troy ounce as of Thursday afternoon, up over 8% since mid-February and well above the previous record, achieved in December when gold struck $2,135 per troy ounce.

What's going on? For one thing, gold tends to have an inverse correlation with the U.S. dollar, the value of which has been weakening over the last three weeks amid the Federal Reserve's ambiguity about interest rate cuts. In turn, this has helped propel gold to its current record high.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Make sure your hard-earned money is protected with a Gold IRA
Gold IRAs help you protect your investments by providing the asset diversification and stability you need. Click on your state to get started.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
Invest in Gold

How the Fed's policy impacts gold prices

Broadly, gold is benefitting from optimism about U.S. monetary policy and investors’ hopes for lower interest rates.

On Wednesday, Federal Reserve Chair Jerome Powell provided clarification, saying interest rate cuts will be possible “at some point this year” if the economy moves as expected and inflation continues to cool. Typically, gold prices rise as interest rates fall, which is a development that could happen sooner than some analysts projected.

According to the CME Group's FedWatch Tool, there's a 73.9% probability that the central bank cuts its federal effective funds rate at its June meeting. This could serve as an ongoing catalyst for gold prices into the second half of the year.

Other reasons gold is up right now

Physical gold does not provide yield like dividend stocks or interest-bearing debt instruments like certificates of deposit or Treasurys, so there’s an opportunity cost to holding it when bond yields are high. However, recent declines in the 10-year Treasury yield — which at the current rate of 4.11% is down 17.6% from its one-year high — are supporting gold prices as investors look for stronger potential gains than Treasury notes are presently offering.

Additionally, investors are often drawn to gold because it functions as a safe haven and often performs well when global markets are volatile. Some of the recent rise in the price of gold could be attributed to geopolitical conflicts, including the wars in Ukraine and Gaza.

Another factor supporting prices has been central bank gold-buying since 2022, especially by China, which drives up demand for the precious metal. This trend continued throughout 2023 and has carried over into 2024 with central banks reporting that they increased gold reserves by 39 tons in January, more than double the amount purchased in December and the eighth consecutive month of net purchases.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Take control of your financial future
Achieve greater financial security by providing effective solutions that can help protect your wealth. Click below to start investing today!
Invest in Gold

Should investors buy gold?

Gold can be a worthwhile asset for diversifying an investment portfolio, but financial advisors recommend not putting more than 5-10% of your money in the metal. While gold is having a good run, there are risks that prices could fall if inflation readings are high or if jobs numbers come in hot, for example.

However, as a store of value, the precious metal often benefits long-term investors over short-term speculators, the former of which can involve purchasing the physical metal or investing in equities such as gold miner stocks and gold-leveraged exchange-traded funds.

Ultimately, whether or not to include gold in a portfolio should be based on personal investing preferences and financial goals, but investors may be looking at a strong year ahead for the shiny yellow metal.

More from Money:

5 Best Online Gold Dealers of 2024

Bitcoin Just Set a New All-Time High. What's Next?

What Drives the Price of Gold?

Ads by Money. We may be compensated if you click this ad.Ad
Goldco can help you take control of your financial future