3 things are influencing the price of gold right now

As many investors know, there is a lot of uncertainty Today’s Economy. Interest rates are rising, inflation — while cooling — is still there and we could be headed for recession before the year is out.

Given that uncertainty, a safe asset like gold can Interesting prospect For those looking to reduce some risk in their long-term investment plans.

Gold prices, like other markets, are influenced by a wide range of economic factors. These factors can increase the demand for gold, thereby increasing its price. if you Thinking of investing in gold, it can benefit you to understand things that can change the value of your investment over time. To begin, we outline three influencing factors Gold price today.

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3 things are influencing the price of gold right now

Here are three factors influencing gold price movements today:

Inflation and interest rates

Since last spring, the Federal Reserve has established a series of Increase in interest rates Designed to reduce inflation. In recent months, the Fed has cut rate hikes from 50 to 75 basis points at a time to 25 — and has even begun to signal that it may be ready to hold off on further rate hikes (while keeping rates high), because Inflation begins to cool. These steps have had an impact – and now there are a few ways to continue.

For one, inflation itself can lead to higher gold prices. When the price of gold rises Inflation Gold prices rose as the US dollar pushed lower and inflation persisted over the past few months.

A rate hike itself can sometimes have the opposite effect, and lead to a downward trend in gold prices. In fact, when the rate hike began in March 2022, initially gold prices fell. when Increase in interest rates And by increasing the yields offered by other safe savings or investments, these options may hold more appeal Aversion risk. But if the Fed decides break rate In the near future, some investors may turn to gold again — its demand and price will increase.

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Fear of recession

Between persistent inflation, rising interest rates and market volatility, many Americans have already been anticipating a recession for months. Fed minutes released in April, also, included a staff economic outlook forecast for a recession this year. quote Bank failure Earlier this year, Fed staff predicted “a mild recession beginning later this year, with a recovery over the next two years.”

Just as the dollar’s value falls, market volatility caused by a recession can make gold more attractive to some investors. After all, gold prices move independently of the stock market, and Diverse with gold Can help you maintain value when other investments decline.

While no one can predict the future, today’s signs are pointing in one direction recession Some may be led to choose gold, in turn increasing its value.

Debt ceiling

The U.S. could face default on its debt without action from Congress in the next few weeks — sending investors into a frenzy. Find safe investment options like gold

“The prospect of an imminent US government default is certainly worrisome,” said Andrew Mastro, CFP, president and founder of Wrought Advisors. “This has never happened before and no one can say with confidence what all the effects will be.”

A default could cause some investors to turn to gold due to volatility in the stock market Added security. While this is one of the factors that has pushed the price of gold in recent weeks, it could also lead to its rise the future Based on the fact that gold proved to be a safe haven during the 2008 financial crisis, Mastro said gold prices could rise if debt defaults and more investors buy.

Bottom line

Although it could be down from recent highsGold prices are in an overall period of growth — and Experts believe It can still increase in months. Because gold is often viewed as a safe haven and hedged against certain riskier investment types, its price can depend on the broader macroeconomic environment. Today, changes in inflation and interest rates, growing concerns about recession and the growing debt crisis play a role Gold appeals to investors.

If you’re looking for ways to protect your portfolio against uncertainty today, allocating a portion of your investments to gold can help. You can learn more about your gold options with a free investment guide.