The Price of Gold Passed Another Milestone

Surging Past $2,500

Gold prices have extended their rally, surpassing $2,500 per ounce, pushing a standard 400-ounce gold bar to $1 million for the first time ever, according to a Bloomberg report.

So what’s making gold so pricey?

What’s Driving Up Prices?

Gold prices have been rising steadily since 2023, powered by a softening U.S. dollar and a market that’s hopeful for an interest rate cut by the Federal Reserve in September. Geopolitical tensions also help the yellow metal, which is traditionally considered a safe haven asset that holds its value in the face of turbulence.

While the U.S. dollar is still relatively strong, it has started to slip. The U.S. Dollar Index, which measures the currency against its main rivals, was down 0.5% on Tuesday, and has fallen more than 3% over the past three months.

U.S. Treasury yields are also sliding as expectations for interest rate cuts are growing, leading some investors to potentially turn to gold over bonds.

Where Are We Headed?

The value of gold has surged more than 20% since the start of the year. But can this rally continue?

The factors that have driven gold prices up to this point will likely stick around for a while. If the Fed starts cutting interest rates in September, market expectations for additional rate cuts could weaken the dollar further and put pressure on bond markets, for example. We’re going to stay tuned.

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