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Will gold’s price drop as inflation cools? Experts weigh in
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Inflation has cooled steadily over the past few months, and experts largely agree that the Federal Reserve will cut interest rates at its next meeting.
That’s good for consumers looking to take out a mortgage or swipe a credit card, but what about for investors — specifically those looking to buy gold?
To date, rising inflation has been a boon to the precious metal, sending the average price of gold to record highs several times this year. Will that run-up continue once inflation gets under control, though?
Don’t miss out on the opportunity to capitalize on gold’s price run. Compare your gold investing options now.
Will gold’s price drop as inflation cools? Experts weigh in
Experts say gold’s price will likely continue to increase even as inflation cools — at least for the foreseeable future. Here’s why.
Interest rates and gold tend to move inversely
According to the CMEGroup’s Fed Watch Tool, there’s currently a 100% chance the central bank cuts interest rates at its September meeting. The question is just how far will they cut them?
However low it goes, it should be good for gold. Studies show that interest rates and gold prices tend to have an inverse relationship, so falling rates should only send gold prices up further.
“Lower rates generally translate to a weaker currency, and all of a sudden you have a new form of inflation scare,” James Cordier, CEO and head trader at Alternative Options, told CBS recently. That, in turn, drives more investors to the precious metal and continues pushing up prices.
Find out what gold investing options are available to you here.
Inflation and rates aren’t the only factor
While inflation and interest rates play a big role in investment activity and overall sentiment, they’re not the only factors to look at when considering gold’s future trajectory.
“Even with cooling inflation and potential Fed rate cuts on the horizon, I think the core factors driving gold’s appeal — like economic uncertainty, geopolitical tensions, and demand for safe-haven assets — are likely to remain strong,” says David Hollander, founder of Liberty Group, a wealth management firm in California.
There’s also strong gold demand from central banks as currencies weaken globally. This should keep prices rising as well, experts say.
“The convergence of declining interest rates, central banks amassing gold reserves in record fashion, and threats of the dollar’s diminishing role as the world’s primary reserve currency has set the stage for a surge in gold prices,” says Sean Mason, an investment advisor representative with Fresno Financial Advisors. “We could very well be in the midst of the perfect storm, hailing gold as an economic sanctuary.”
More opportunities for growth
There’s also growth to think about. With the Fed poised to cut interest rates, that means yields on other investments like bonds (or even savings accounts and certificates of deposit) are going to fall. At gold’s current highs, the metal is poised to offer better growth as these other products decline.
“The stable yield on gold amidst likely Fed rate cuts could further attract investors, making gold increasingly appealing compared to dollar-denominated assets,” says Keith Weiner, CEO and founder of Monetary Metals.
Gold will also likely be a better choice than other low-risk options like T-bills once rates start to fall.
“There is an opportunity cost to holding gold. When you buy it, you are giving up whatever Treasury is paying on T-Bills. This is currently well over 5%, but when this falls back to 0%, then there is no disincentive to hold gold, and more investors will do so,” Weiner explains.
The bottom line
While experts largely agree that gold prices aren’t poised to drop anytime soon, there’s always the chance that things can change. And if they do — and it causes the prices to take a dip? Cordier says it should be only temporary.
“With prices currently trading near record highs, there’s always a chance for a pullback,” Cordier says. “However, with bullish fundamental factors as deeply entrenched as they are now, any decline in value will likely be met with new buying.”
If you’re interested in buying gold, there are many ways to do it. You can open a gold IRA, buy physical gold bars and coins, invest in gold stocks and ETFs and more. Talk to an investment professional if you need help deciding the best strategy.
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After Tyre Nichols’ fatal beating, Memphis officer texted photo of bloodied man to ex-girlfriend, she testifies
A former Memphis police officer charged in the fatal beating of Tyre Nichols sent his ex-girlfriend a photo of the badly injured man on the night he was punched, kicked and hit with a police baton following a traffic stop, according to trial testimony Wednesday.
Brittany Leake, a Memphis officer and Demetrius Haley’s former girlfriend, testified during the criminal trial that she was on the phone with Haley when officers pulled Nichols over for a traffic stop. She said she heard a “commotion,” including verbal orders for someone to give officers his hands.
The call ended, but Haley later texted the photo in a group chat comprising Haley, Leake and her godsister, she testified. Prosecutors displayed the photo for the jury. It showed Nichols with his eyes closed, on the ground with what appeared to be blood near his mouth and his hands behind his back.
Leake said that when she saw the photo, her reaction was: “Oh my God, he definitely needs to go to the Med.”
The Med is shorthand for Memphis’ trauma hospital.
The fatal beating, caught on police bodycams and street surveillance cameras, has sparked protests and calls for police reform. Officers said they pulled over Nichols for reckless driving, but Memphis’ police chief said there was no evidence to substantiate that claim.
Haley, Tadarrius Bean and Justin Smith are on trial after pleading not guilty to charges that they deprived Nichols of his civil rights through excessive force and failure to intervene, and obstructed justice through witness tampering. Their trial began Sept. 9 and is expected to run three to four weeks.
George Walker IV / AP
The Memphis Police Department fired the three men, along with Emmitt Martin III and Desmond Mills Jr., after Nichols’ death. The beating was caught on police video, which was released publicly. The officers were later indicted on the federal charges. Martin and Mills have taken plea deals.
During her testimony Wednesday, Leake said she deleted the photo after she saw it and that sending such a photo is against police policy.
“I wasn’t offended, but it was difficult to look at,” she said.
Leake said Haley had sent her photos before of drugs, and of a person who had been injured in a car accident.
Earlier Wednesday, Martin was on the witness stand for a third day. Defense attorneys tried to show inconsistencies between Martin’s statements to investigators and his court testimony. Martin acknowledged lying about what happened to Memphis Police Department internal investigators, to try to cover up and “justify what I did.”
But Martin said he told the truth to FBI investigators after he pleaded guilty in August, including statements about feeling pressure on his duty belt where his gun was located during the traffic stop, but not being able to see if Nichols was trying to get his gun. Martin has testified that he said “let go of my gun” during the traffic stop.
Martin Zummach, the attorney for Justin Smith, asked Martin if he knew of any reasons why Nichols did not simply say, “I give up.”
“He’s out of it,” Martin said. “Disoriented.”
Martin testified that the situation escalated quickly when Haley pulled his gun and violently yanked Nichols from his car, using expletives and failing to tell Nichols why he had been pulled over and removed from the vehicle.
“He never got a chance to comply,” Martin said.
Nichols, who was Black, was pepper sprayed and hit with a stun gun during the traffic stop, but ran away, police video shows. The five officers, who also are Black, then beat him about a block from his home, as he called out for his mother.
Video shows the officers milling about and talking as Nichols struggled with his injuries. Nichols died Jan. 10, 2023, three days after the beating.
An autopsy report shows Nichols – the father of a boy who is now 7 – died from blows to the head. The report describes brain injuries, and cuts and bruises on his head and elsewhere on his body.
Jesse Guy testified that he was working as a paramedic for the Memphis Fire Department the night of the beating. He arrived at the location after two emergency medical technicians, Robert Long and JaMichael Sandridge.
Guy said he was not told about the medical problems Nichols had experienced before he arrived, and that Nichols was injured, seated on the ground and unresponsive.
Nichols had no pulse and was not breathing, and it “felt like he was lifeless,” Guy said.
In the ambulance, Guy performed CPR and provided mechanical ventilation, and Nichols had a pulse by the time he arrived at the hospital, the paramedic said.
Guy said Long and Sandridge did not say if they had checked Nichols’ pulse and heart rate, and they did not report if they had given him oxygen. When asked by one of Bean’s lawyers whether that information would have been helpful in treating Nichols, Guy said yes.
Long and Sandridge were fired for violating fire department policies after Nichols died. They have not been criminally charged.
The five officers also have been charged with second-degree murder in state court, where they pleaded not guilty. Mills and Martin are expected to change their pleas.
Federal prosecutors have previously recommended a 40-year sentence for Martin. A date has not been set in state court yet.
Nichols worked for FedEx, and he enjoyed skateboarding and photography. The city of Sacramento, where Nichols grew up, named a skatepark in his honor. “Tyre fell in love with skateboarding at a young age and it wasn’t long before it became a part of his lifestyle,” states the resolution approved by the city council. He had a tattoo of his mother’s name.
“Tyre Nichols’ family have been praying for justice and accountability from the very beginning of this tragedy,” Ben Crump and Antonio Romanucci, the civil rights attorneys representing Nichols’ family, said in a statement when the trial began.
Boeing’s CEO said Wednesday that the company will begin furloughing “a large number” of employees to conserve cash during the strike by union machinists that began last week.
Chief Executive Kelly Ortberg said the people who would be required to take time off without pay starting in coming days include executives, managers and other employees based in the U.S.
“While this is a tough decision that impacts everybody, it is in an effort to preserve our long-term future and help us navigate through this very difficult time,” Ortberg said in a company-wide message to staff.
Boeing didn’t say how many people will face rolling furloughs, but the number is expected to run into the tens of thousands. The aerospace giant had 171,000 employees at the start of the year.
About 33,000 Boeing factory workers in the Pacific Northwest began a strike Friday after rejecting a proposal to raise pay by 25% over four years. They want raises of at least 40%, the return of a traditional pension plan and other improvements in the contract offer they voted down.
Scott Brauer / Bloomberg via Getty Images
The strike is halting production of several airplane models including Boeing’s best-selling plane, the 737 Max. The company gets more than half of the purchase price when new planes are delivered to buyers, so the strike will quickly hurt Boeing’s cash flow.
Ortberg said selected employees will be furloughed for one week every four weeks while retaining their benefits. The CEO and other senior executives will take pay cuts during the duration of the strike, he said, without stating how deep the cuts will be.
All work related to safety, quality, customer support and certification of new planes will continue during the furloughs, he said, including production of 787 Dreamliner jets, which are built by nonunion workers in South Carolina.
Ortberg said in a memo to employees that the company is talking to the International Association of Machinists and Aerospace Workers about a new contract agreement that could be ratified.
“However, with production paused across many key programs in the Pacific Northwest, our business faces substantial challenges and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover,” he said.
Boeing’s chief financial officer warned employees earlier this week that temporary layoffs were possible.
The company, which is based in Arlington, Virginia, but has most of its commercial-airplanes business located in the Pacific Northwest, is also cutting spending on suppliers, freezing hiring and eliminating most travel.
Despite two full days of talks assisted by the Federal Mediation and Conciliation Service, the union said Wednesday that no resolution had been reached and no additional negotiations were scheduled, according to CBS Seattle affiliate KIRO-TV.
Striking workers are picketing at several locations in the Seattle area, Oregon and California. The union, which recommended the offer that members later rejected by a 96% vote, is surveying the workers to learn what they want in a new contract. The union’s last strike at Boeing, in 2008, lasted about two months.
If the walkout doesn’t end soon, Boeing’s credit rating could be downgraded to non-investment or junk status, which would make borrowing more expensive. Shortly after the walkout began Friday, Moody’s put Boeing on review for a possible downgrade, and Fitch said a strike longer than two weeks would make a downgrade more likely.
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