U.S. dollar down, gold hits all-time high
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Why did gold prices reach an all-time high?
Fun fact to owe the day, one troy ounce is about 10% heavier than one regular ounce. Gold is where we're going to start. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Rizdahl. It is Monday today. This one is the 22nd of December. Good as always to have you along, everybody. It cost you, as of the close today in New York, a record $4,444.60 to get yourself one of the aforementioned troy ounces of gold. That is yet another record high. The safest of safe havens is up 70% for the year, 7-0%.
What factors are causing the U.S. dollar to decline?
And yes, there is lots going on out there to be seeking safety from. But as Marketplace's Henry Epp reports now to get us going, there is something else in the mix, too. A lot of market analysts think that the Federal Reserve will cut rates at least twice next year. That's based on the direction the job market and inflation appear to be heading. There are two reasons lower rates could make gold more interesting to investors. The first is straightforward, says Paolo Pasqueriello, a finance professor at the University of Michigan. In finance, when somebody wants to speculate on a financial asset, you want to make a bet on stock or a bond or gold or silver, the way speculators do it is to borrow money in order to make the bets.
Lower interest rates would make it cheaper to borrow money to buy a bunch of gold. The second reason is a bit more conceptual. Instead of buying gold and silver, you could keep money in the bank. And if you keep money in the bank, you'll be earning interest. say in a certificate of deposit or money market account. But if rates go down, the interest you get from the bank often goes down too. And even though gold doesn't earn you any interest, it could become relatively more attractive. Philip Strebel is chief market strategist at Blue Line Futures. An investor will want to get that money working somewhere else where they believe that they can get a higher yield. So gold has historically been their like go-to commodity on that.
So the expectation that more investors may flock to gold if rates fall could be part of the reason the metals price has been rising. But the level of interest rates is not the only determinant of the price of gold. Campbell Harvey is a professor of finance at Duke.
How are ranchers affected by rising beef prices?
Another factor, a lot of countries that have historically invested in U.S. Treasury bonds because they're a safe bet are feeling a bit less sure about them these days. Countries that are heavily weighted in U.S. dollar assets are looking for something else defensive, and gold is at the top of the list. Those countries are buying it up, too, increasing the demand and the price. I'm Henry Epp for Marketplace. While we're at it, precious metals, that is, silver, platinum, and palladium all jumped today. Oh, and equities? Why, the Santa Claus rally has begun. We will have the details when we do the numbers.
The November Consumer Price Index came out last week. Inflation is cooling. Kinda. As you know, the data come with a whole bunch of caveats. That said, part of that cooling came in a critical category. Food at home. Groceries. But, and you for sure don't need me or inflation data to tell you this, if you've been anywhere near a grocery store recently, the price of beef keeps on going up. Meat in general up 8.9% from a year ago. Ground beef up nearly 16%. Beef roasts up a whopping 21% as we head into a week of holiday cooking. Marketplace's Kristen Schwab has more on that. We talk a lot about how terrible consumers feel about prices and how many of them, especially upper income households, keep spending anyway.
That split is maybe best illustrated at the supermarket, says David Anderson, an economist at Texas A&M. Everybody goes to the store and we all complain a lot, but we stuck it in the cart anyway and moved on to the next. Despite rising prices, Americans likely consumed more beef in 2024 than they had in nearly 15 years. Some theories, the pandemic coaxed people into cooking more intimidating foods. Protein is very in right now, especially with the growing GLP-1 crowd.
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Chapters
8 chapters
1
Why did gold prices reach an all-time high?
0:02–0:49
2
What factors are causing the U.S. dollar to decline?
0:49–2:32
3
How are ranchers affected by rising beef prices?
2:32–4:55
4
What challenges do ranchers face in increasing beef production?
4:55–7:40
5
How is the role of storytellers evolving in corporate America?
7:40–10:01
6
What is the significance of brand storytelling in marketing?
10:01–12:47
7
How do product recalls impact companies and consumers?
12:47–15:33
8
What are the consequences of poorly managed product recalls?
15:33–26:23