Hopes of interest rates cuts creates gold rush, driving up prices of precious metal, analysts say

Gold prices hit record highs Tuesday as hopes increase that the Federal Reserve will cut interest rates. 

The spot price of gold, The Guardian reports, hit a record $2,531.60 per ounce, more than 1% over Monday’s price. This makes a standard gold bar, which weighs 27.34 pounds, worth more than $1 million. 

Lower interest rates reduce demand for bonds and shares, as they reduce returns for those investments. Analysts, according to The Guardian, think that the gold rally that’s driving up the prices is driven by increasing investor interest in the wake of falling demand for investments impacted by lower interest rates. 

With the inflation rate coming down to the Fed’s targeted 2%, analysts are expecting that interest rates will be cut. A speech by Fed Chair Jerome Powell at the central bankers’ annual conference on Friday will provide more clues as to when the cuts will happen and by how much.