Should You Buy Gold & Silver Before Fed Rate Cuts?

As the Federal Reserve prepares to potentially cut interest rates in September, investors are increasingly turning their attention to gold as a potential safe-haven asset. With gold prices recently hitting a record-breaking $2,500 per ounce and global gold ETF assets surging to a new high of $264 billion, some analysts are predicting even loftier price targets.

But does this surge in gold popularity signal the right time to invest? According to Robert Minter, Director of ETF Investment Strategy at abrdn, the answer may lie in historical trends.

"ETF investors have a penchant for rate cuts," Minter told Yahoo Finance. "Gold doesn't generate interest income, so when rates decline, it becomes more attractive relative to other assets." He points to the last three rate cut cycles – 2000, 2006, and 2018 – during which gold prices soared by 57%, 113%, and 69% respectively. Silver, another precious metal, exhibited even more impressive gains.

Minter's analysis underscores the potential allure of gold as a hedge against economic uncertainty and inflation, often associated with periods of interest rate cuts. However, it's essential to note that past performance is not indicative of future results. Investors should conduct thorough research and consider their individual financial goals before making any investment decisions.   

As the market eagerly awaits the Fed's policy moves, the performance of gold and gold-backed ETFs will undoubtedly remain a focal point for investors seeking to navigate the evolving economic landscape.

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