Gold futures opened at $4,610 per troy ounce on Tuesday, marking a 0.1% decline from Monday's closing price of $4,614.70. The precious metal had reached an unprecedented high of $4,620 just the day before.
Federal Reserve Chair Jerome Powell addressed an investigation by the Trump administration, describing it as a continuation of efforts to influence interest rates. Powell emphasized that the Federal Reserve's autonomy from political interference is crucial for economic stability. He noted that if an administration can arbitrarily lower rates, the central bank's ability to manage inflation is compromised.
Lower interest rates typically bolster gold by diminishing returns on alternative assets such as cash.
The opening price on Tuesday showed varied performance compared to recent periods. It was up 3.6% from one week earlier, 7.8% higher than a month ago, and had surged 70% over the past year. On December 29, the one-year gain was recorded at 74.5%.
Darrell Fletcher, managing director of commodities at Bannockburn Capital Markets, cautioned investors about purchasing gold near peak levels. "Buying high to hope for short-term higher is a tough strategy," he remarked. Fletcher also observed that gold is rebounding from prolonged low prices and gaining popularity as a diversification tool among central banks and individual investors.
Alex Tsepaev, chief strategy officer of B2PRIME Group, advised that gold should be viewed as a stabilizer within diversified portfolios rather than a source of high returns. "Gold should not be seen as a driver of supercharged returns — it's there to act primarily as a stabilizer in a diversified portfolio," Tsepaev explained.
Thomas Winmill, portfolio manager at Midas Funds, highlighted the speculative nature of gold investments. He stated that gold, as a commodity, is subject to unpredictable macroeconomic, political, industrial, and financial factors. Winmill urged traders to consider this unpredictability to avoid overexposure and unrealistic expectations.