Gold Surges 8% in August on Falling Inflation and Weakening Dollar

The price of gold has been rising sharply in August, reaching around $4,400 an ounce, a gain of 8% in less than two weeks. This increase is attributed to macroeconomic factors such as falling inflation and decreasing likelihood of Federal Reserve rate hikes. The recent weak July jobs report reduced the probability of a rate hike by the Fed, making gold more attractive to investors.

When bond yields and interest rates are low or stable, gold becomes more appealing due to its lack of income-generating potential. Additionally, the weakening dollar has made gold more desirable for investors, as they tend to buy more gold when the dollar is weaker. Central banks have also been stockpiling gold to diversify away from the dollar.

Investors interested in allocating a portion of their portfolios to gold can consider funds such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), which own physical gold bullion. These investments provide a way to hedge against inflation and market pullbacks, as gold does not move with the stock market.