Economic conditions can significantly affect interest in gold — as well as the precious metal’s price.
The same can be said for other assets. For example, portfolio holders may consider buying U.S. Treasuries when interest rates are high, as this tends to increase Treasury yields, according to CNN Business.
Following a series of increases to the target range for the federal funds rate the Federal Reserve’s Federal Open Market Committee (FOMC) initiated to lower inflation — which at one point in 2022 topped more than 9% — interest rates have risen in the past two years.
The average rate for a 30-year fixed-rate mortgage loan, for example, was 3.22% in January 2022; by the end of 2022, it had climbed to more than 6% — and in the last week of 2023, that rate was approximately 6.61%, according to Freddie Mac data.
If the FOMC starts making rate cuts in 2024 — as the projection it released in December 2023 suggests will happen — and U.S. Treasury yields fall, portfolio holders may increasingly view gold as a more attractive option.
Concerns about a potentially pronounced economic decline could also impact interest rates and the demand for gold, according to U.S. Money Reserve President Philip N. Diehl, who previously served as the 35th director of the U.S. Mint.
“If there’s an expectation that the U.S. is headed for a recession, we could see the Fed lower interest rates to stimulate the economy,” Diehl says. “That could indicate a significant change in gold prices.”
Some portfolio holders — such as Robert E. — have already begun to incorporate gold into their savings plans.
In one of the U.S. Money Reserve reviews posted on the Better Business Bureau website, Robert E. says he purchased gold with the company’s assistance.
“[It] makes me sleep comfortably knowing I was able to lock in my [life’s] savings,” Robert says. “Having someone watch over what is going on and helping me to diversify my portfolio is priceless.”
Florida-based portfolio holder Craig, in one of the U.S. Money Reserve client testimonials the company has shared on its website, says that while he previously focused on stocks, he has since begun to purchase precious metals.
“Gold and silver, precious metals, are going to hold their value and increase,” Craig says. “Precious metals, as a foundation, [is] solid; it should give you confidence — and that’s what you need in your portfolio.”