Gold reached a new all-time high this afternoon, while stock markets across the Atlantic experienced declines.
Investors flocked to the safe-haven asset as the US initiated a series of interest rate cuts.
Currently, gold is priced at $2,621 per ounce, marking a 1.1% increase today and a 36% rise over the past year.
Gold becomes a more appealing investment during periods of lower interest rates since it does not yield interest or dividends.
Fawad Razaqzada, a market analyst at City Index, highlighted that geopolitics is also driving gold’s demand:
“Ongoing geopolitical risks, such as conflicts in Gaza, Ukraine, and other regions, will continue to bolster gold’s appeal as a safe haven.”
Today’s rise in gold coincided with a challenging day for the stock markets.
Following a rally spurred by the recent interest rate cut, both US and European stock markets pulled back. This sell-off was amplified by comments from JPMorgan CEO Jamie Dimon, who expressed skepticism about the Federal Reserve’s expectation for a “soft landing” and the quick resolution of inflation issues.
Kathleen Brooks from XTB mentioned to The Telegraph:
“Jamie Dimon’s skepticism about the soft landing theory has dampened market sentiment. Additionally, the decline in tech stocks like Nvidia, which are often seen as market sentiment indicators, has led to broader sell-offs impacting both US and UK stocks.”
Stock indices like the Dow and S&P 500 fell after reaching record highs the previous day due to the Fed’s rate cut and indications of further reductions as inflation eases.
Currently, the S&P 500 and Nasdaq are down 0.4%, while the Dow has dropped 0.2%.
In Europe, the FTSE 100 declined by 1.2%, the FTSE 250 by 1.6%, Germany’s Dax by 1.4%, and France’s Cac 40 by 1.5%.
Susannah Streeter, from Hargreaves Lansdown, remarked:
“The FTSE 100 has had a disappointing end to the week, pulled down by gloomy consumer outlooks and more assertive comments on the direction of interest rates.”
Retailers were particularly affected as investor sentiment weakened following a further drop in the GfK’s Consumer Confidence Barometer.
Bank of England policymaker Catherine Mann also warned that sustained inflationary pressures might necessitate keeping borrowing costs higher for an extended period, adding to the negative market mood.
