Last night, the gold price reached another new all-time high.
The precious metal rose 1.6% to US$3,744.
That coincided with a strong session for all major US indices, which also reached fresh record highs.
Gold is viewed as a safe-haven asset, with an extremely long track record of increasing in value in times of turbulence.
The gold price has rallied strongly this year on persistent geopolitical uncertainties, including the Russia-Ukraine war and the Middle East conflict.
Over the past couple of weeks, the gold price received a further boost after the US Federal Reserve cut interest rates by 25 basis points and signalled more rate cuts were on the horizon.
The lowering of interest rates boosts the appeal of gold, a non-income-producing asset. In a low-interest-rate environment, the opportunity cost of holding it relative to interest-earning assets such as dividend shares decreases.
According to Bloomberg, investors have piled into US gold-backed exchange-traded funds (ETFs) this year, with total holdings in mid-September reaching their highest point since 2022.
All eyes on the next inflation report
This week, markets will reflect on the latest US Personal Consumption Expenditures (PCE) report, the Fed's preferred measure of underlying inflation.
Investors are expecting to see a further cooling of inflation, reinforcing the case for further interest rate cuts.
This could spark the next rally for the gold price.
Tonight, investors will also hear from Federal Reserve Chair Jerome Powell for fresh signals on the central bank's monetary policy path.
ASX gold stocks and ETFs continue to rally
A strong gold price has translated into a very favourable period for many ASX-listed gold stocks and exchange-traded funds (ETFs).
Among the top-performing gold stocks have been Newmont Corporation CDI (ASX: NEM) and Evolution Mining Ltd (ASX: EVN).
Newmont shares have risen 17% this month and 60% over the past 12 months. Evolution Mining shares have eclipsed this performance, rising 23% in a month and 135% over the past year.
Holders of ASX-listed gold ETFs have also strongly benefited from the recent gold price rally.
Vaneck Gold Bullion ETF (ASX: NUGG) has risen 10% this month and 47% over the past year.
Betashares Gold Bullion Currency Hedged ETF (ASX: QAU), which removes the impact of currency, is up 11% this month and 38% over the past year.
Those who are optimistic that further rate cuts could drive additional support for the gold price might want to consider adding an ASX gold stock or ASX-listed gold-focused ETF to their portfolio.
The post Why Friday's US inflation report could send the gold price to another record appeared first on The Motley Fool Australia.
Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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