The Commercial Real Estate Alpha Site

“The best way to predict the future is to invent it.”  

— Alan Kay

Gold hits all time highs

Yesterday gold prices hit all time highs after increasing over a percentage point during intraday trading. The price surge comes just before the Fed’s FOMC meeting next week during which we expect it to cut rates by at least 25 basis points. Two economic data points also dropped this week, CPI and PPI, which both indicated a slight pick up in inflation during August.

Gold is typically seen as a hedge against inflation and a store of value in good and bad times. Many investors buy gold in periods of uncertainty, which explains recent price action especially following higher inflation prints. The market still has questions about the magnitude (25 or 50 basis points) of the first rate cut, as well as what’s to follow. So we aren’t surprised to see that gold is up, as the market is equating it with safety regardless of the Fed’s landing being soft or hard.