Gold prices perked up this week after US Federal Reserve chair Jerome Powell’s Jackson Hole speech. The yellow metal hit $1,820 /oz, a four-week high, on Monday. Powell hinted that US interest-rate hikes were still some way away. Low interest rates and the threat of inflation are good for gold. In sterling terms, gold cost £1,315/oz this week, down by 5% since 1 January.
The US dollar weakened following Powell’s comments. A weaker dollar is good for gold because the yellow metal is usually priced in dollars. “Gold has gained 4,160% across the last five decades against the dollar”, says Russ Mouldin Shares. Gold bugs spy parallels with the inflationary surge of the 1970s, not least because the US government is again “running welfare programmes… it cannot afford”.
This year’s global recovery has pushed investors out of gold and into stocks, where they can bank dividends, says Stefan Wagstyl in the Financial Times. If interest rates do rise then “bonds would start generating higher incomes, making gold (and other incomeless assets) less attractive”. It may take another crisis to trigger a big gold rally, as when prices soared to all-time highs last year. But there are certainly plenty of geopolitical tensions to worry about, while “the planned exit from the unprecedented global easy money regime is… fraught with danger”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Why now is the right time to invest in biotechThe biotech sector holds huge potential for investors, with strong growth and attractive valuations. Here's the best way to play it.
-
Zoopla: Busiest home buying May since 2021, but property asking prices slideBuyers return to the market after the end of higher stamp duty thresholds and post-Easter lulls, but average sales are £16,000 below asking price
-
Gold’s allure and why you should never 'pay a premium for graded coins'Opinion It is easy to become distracted by the beauty of gold, but remember why you buy it, says Dominic Frisby
-
The mystery of America’s gold and why an audit mattersHow much gold does the US actually have? Dominic Frisby explains why it matters
-
Gold’s surprisingly stealthy bull marketGold's multi-year gains gathered less attention than you’d expect, but that now seems to be changing, says Cris Sholto Heaton
-
Three gold mining stocks with strong green credentialsPersonal View Tom Bailey of HANetf highlights three gold and precious metal miners to consider.
-
Weigh up this sustainable gold ETC from the Royal MintProfessional investor Hector McNeil highlights an investment in gold, the world's oldest monetary system
-
Why is gold looking attractive on Wall Street?Wall Street is taking to gold. What's pushing the commodity to be attractive?
-
Gold or silver: which is the better bet?Should you invest in gold or silver? Or should you own equal amounts of the precious metal?
-
Gold expands its horizons – but is it enough to drive prices?Gold is increasingly being used in industry, be it for nanotechnology, cancer therapy or fighting malaria. But is this demand enough to boost prices?
