Gold tops $5,000 for the first time as dollar slides, global risks mount
The price of gold has broken the $5,000 per troy ounce barrier for the first time ever, with silver also reaching record highs. Precious metals have become increasingly attractive as an asset class due to a weakened US dollar, uncertainty at the Federal Reserve, and geopolitical turmoil.
Spot gold was trading at around $5,110 per ounce on Monday morning, while silver surged 8% to climb above $100 per ounce.
Stocks opened slightly higher after two consecutive weeks of declines.
The Dow Jones Industrial Average started Monday’s trading session up more than 150 points, or 0.32%, while the S&P 500 index opened 21 points higher, or 0.3%.
The Nasdaq began the day up nearly 32 points, or 0.14%.
The US dollar weakened further on Monday, reaching a four-month low as investors factored in increasing political and macroeconomic risks.
The decline in the dollar is a reflection of concerns about another US government shutdown, renewed trade tensions with Canada, and heightened geopolitical uncertainty that is driving investors towards hard assets.
Markets are also anticipating Wednesday’s Federal Reserve rate decision and Chair Jerome Powell’s press conference for insights into the policy outlook.
Dean Lyulkin, founder of The Dean’s List newsletter, stated that gold and silver are rallying due to the changing outlook on interest rates and Federal Reserve policy as Powell’s tenure nears its end.
According to Lyulkin, investors are pricing in a more dovish Fed post-Powell, even though bond markets have not fully reflected it yet.
Metals traders are anticipating deeper rate cuts over the next year, with gold performing well historically when real yields compress.
Aside from interest rates, Lyulkin emphasized the importance of precious metals as portfolio insurance amid global instability.
He stated, “Gold and silver aren’t just macro trades, they’re portfolio hedges against a world that’s getting more unstable, not calmer.”
