Gold (GLD) is on a hot streak. At the end of last week, gold futures closed at a fresh record price of $2,600 per ounce. The shiny metal benefited from the Fed cutting interest rates by an aggressive 50 basis points. This decreases the attractiveness of the U.S. dollar and increases the value of gold.
Gold mining firms will perform well. Watch Barrick Gold (GOLD), Kinross (KGC), and Newmont (NEM). Gold prices have a good chance of rising further as the market expects the Fed to keep cutting rates.
Geopolitical tensions are ongoing. Gaza, Ukraine, and China/Taiwan add to such uncertainties. This leads to gold acting as the ultimate safe haven. Still, investors now have cryptocurrencies like Bitcoin (BTC-USD) as an alternative holding to gold.
Risks
The record gold prices might attract investors to sell and take profits. Investors do not know who the source of the buying activity is. The unknown holders may unexpectedly dump the holding.
Your Takeaway
U.S. dollar weakness is increasing. This increases the value of gold as a safe haven holding amid the uncertainties. However, the market historically worked through the unknowns. The currency debasement, which disconnects the dollar from gold prices, was a bullish development. Whoever holds gold retains their purchasing power. This is not a feature that currencies offer.
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