Gold’s hitting new records again. Here’s what it means for the economy

The 2024 monster gold rally is picking up steam.

The 2024 monster gold rally is picking up steam. The most actively traded gold futures contract has hit repeated highs this year, most recently notching a fresh record of $2,687.30 on Tuesday before retreating. That comes after the Federal Reserve slashed US interest rates by a supersized half point last week. Gold, traditionally perceived as a haven, has climbed roughly 30% this year, outperforming the benchmark S&P 500 index’s 20% gain. That has in part been driven by a jump in demand from central banks including in China, Turkey and India, who have added to their gold piles this year to diversify away from the US dollar. But some investors say the rally in the yellow metal also suggests that markets are still on edge about the US economy’s health, despite fresh highs in the stock market. Traders tend to flock to gold during periods of uncertainty, betting that its value will hold up better than other assets such as stocks, bonds and currencies if the economy faces a downturn. Fed Chair Jerome Powell said at the central bank’s post-meeting press conference last week that the whopping half-point interest rate cut was intended to get ahead of further labor weakness. Some economists have said that even after the rate reduction, the economy isn’t yet in the clear, pointing out that the unemployment rate is difficult to slow once it begins climbing. The unemployment rate was at 4.2% in August, still low by historical standards but up from 3.8% a year earlier. Fresh consumer confidence data on Tuesday indicated that Americans are feeling pessimistic about the US economy and future of the job market. The Conference Board’s monthly confidence index slid to a lower-than-expected 98.7 reading in September, down from August’s upwardly revised 105.6.