Gold prices continue their record run

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Experts say there are several things pushing prices higher

After chip stocks, the best bet on Wall Street in the first quarter of 2024 has been the price of gold. The precious metal, which began to rally in mid to late 2023, breached a new record Monday at $2,262.19 an ounce.

SPDR Gold Shares, the ETF that tracks the price of gold and which many investors use to purchase gold, has risen 8.5% over the last three months.

What’s behind the rally? The same reason many stock prices are also climbing. The latest inflation data reinforces the belief that the Federal Reserve will cut interest rates as early as June. Analysts say lower interest rates make gold more attractive because fixed-income assets are less attractive.

Alex Ebkarian, COO and co-founder of Los Angeles-based Allegiance Gold, recently told ConsumerAffairs that gold also performs well in times of high inflation and the threat of recession – two other economic possibilities that can’t be completely ruled out. And then, there’s supply and demand.

“Gold’s finite supply and the worldwide demand for it by central banks, and even the perceived demand for it by BRICS nations, will keep the price of gold elevated in 2024,”Ebkarian said.

Optimism from the Fed

Gold investors also took heart from Fed Chairman Jerome Powell’s comments on Friday, when key inflation data came in a bit less than expected. Powell said the data for February was “more along the lines of what we want to see.”

Before rushing out to buy gold, however, it’s a good idea to do some research and get advice from a trusted and objective financial adviser. Robert Johnson, professor of finance at the Heider College of Business, at Creighton University, says there is an opportunity cost of investing in gold, since over time stocks tend to appreciate at a faster rate.

“While having a small position in precious metals may dampen portfolio volatility in the short-run, the tradeoff between slightly dampened volatility and the lost long-term return is certainly not a prudent one, particularly for Gen Z/millennials with long investing time horizons,” Johnson said.

Before selecting a gold broker, investors might want to check out what the experts at ConsumerAffairs found when they looked into the best gold brokers.

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