CashNews.co
London’s gold price benchmark showed the precious metal reached an all-time high of $2,521.55 (£1,935) per ounce at an auction on Tuesday morning.
The London Bullion Market Association (LBMA) said the price of gold (GC=F) topped the $2,500 mark for the first time in its history of over 100 years at an auction on Monday morning, settling at $2,500.05 per ounce.
The precious metal extended its gains at an auction on Tuesday morning, as investors awaited further clues as to when the US Federal Reserve plans to cut interest rates.
The minutes from the Federal Reserve’s July interest rate meeting are due to be released on Wednesday, which investors will pore over for any indication on the central bank’s timeline for cuts.
The main focus for investors this week will be Fed chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday, the annual central banking conference.
Hopes that the Fed will soon lower its base rate from a 23-year high of 5.3% have been on the rise following recent economic data. A Reuters poll found that a slim majority of economists expect the central bank to announce three rate cuts of 25 basis points by the end of the year.
Read more: The worst performing investment funds so far this year
A weaker-than-expected July jobs report sparked recession fears and concerns that the Fed may have been behind the curve on lowering interest rates. A closely watched US inflation report released last week showed that consumer prices rose 2.9% in July, slowing from 3% in June, which added to market bets of an impending rate cut.
The price of gold has risen as the prospect of Fed rate cuts has boosted the appeal of the non-yielding precious metal for investors.
Laith Khalaf, head of investment analysis at investment platform AJ Bell, said: “The economic and geopolitical uncertainty of recent years has helped propel gold upwards. But it’s actually been central banks behind the buying action, with gold ETFs (exchange-traded funds) seeing a number of years of outflows.”
He added that “central banks have been attracted to gold because it’s liquid, carries no credit risk, and is free from any geopolitical interference.”
Read more: Wage growth likely to trigger next rise in triple lock state pension
According to data provided by AJ Bell, the iShares Physical Gold ETC (SGLNL.XC) (exchange-traded commodity) has generated a real three-year return of 24.8%, beating other assets such as bitcoin (BTC-USD) and a global index tracker, when referring to the Fidelity Index World tracker.
UBS analysts predicted that gold prices could reach $2,600 per ounce by the end of 2024.
“As ever gold remains worthy of consideration as a portfolio diversifier because it behaves differently to other asset classes, but it shouldn’t make up more than 5 to 10% of your portfolio at most,” said Khalaf.
“While gold is known as a safe haven, it is volatile, and despite having a reputation for being an inflation hedge, it has endured long periods of below inflation returns.”
Download the Yahoo Finance app, available for Apple and Android