Gold hits $4,000 for the first time ever

SEATTLE (Scrap Monster): The price of gold surpassed $4,000 on Tuesday, Oct. 7 for the first time ever as the government entered its seventh day of a partial shutdown.

Gold futures were trading at $4,006 around 11 a.m. ET before slipping under the benchmark but quickly recovered. The commodity is up 50% year to date.

Gold has continued to rise as the U.S. dollar weakens and inflation persists, according to the CME Group, an American financial services company.

The dollar is down 10% year to date. Additionally, the current rate of inflation is 2.9%, which is above the Federal Reserve’s 2% target.

Investors are worried about the potential for inflation to erode the purchasing power of the dollar, according to CME Group analysis. As a result, many are using gold to hedge their portfolios.

Why is the price of gold going up?

Gold has historically gone up during times of uncertainty and inflation, which is what makes it appealing to investors.

According to CNBC, banks and retail investors are buying gold at an increased pace. Countries, including China, are moving away from U.S. Treasurys after President Donald Trump imposed sanctions on Russia over its 2022 invasion of Ukraine.

While speaking at the Greenwich Economic Forum, Founder of Bridgewater Associates Ray Dalio said gold should make up about 15% of investment portfolios.

"Gold is a very excellent diversifier of the portfolio," he said. "It is the one asset that does very well when the typical parts of your portfolio go down."

Investors can access gold through physical holdings, gold ETFs and futures contracts.

Courtesy: www.usatoday.com