Gold, A Pure Bar, Is Now Worth $1 Million: What Can It Buy You? - Apple (NASDAQ:AAPL)

A Bar Of Pure Gold Is Now Worth $1 Million: What Can It Buy You?

by Piero Cingari Benzinga Staff Writer

Zinger Key Points

Gold surpassed $2,500 per ounce, pushing a standard 400-troy-ounce gold bar to $1 million for the first time ever.
A weakening U.S. dollar, hitting 2024 lows, further boosts gold's appeal by making it cheaper for foreign investors.
Discover Fast-Growing Stocks Every Month

As the price of gold recently surpassed $2,500 per troy ounce, the value of a standard 400-troy-ounce gold bar has skyrocketed to the $1-million milestone for the first time in history.

This surge isn’t due to a flood of consumers rushing to buy jewelry or a sudden spike in investor demand for this traditional safe haven. Instead, the rally is largely fueled by expectations surrounding the Federal Reserve’s monetary policy.

Why Have Gold Prices Rallied This Summer?

Gold spiked 2.7% month-to-date as of Aug. 20, following a robust 5.2% gain in July. The driver? Growing anticipation that the Federal Reserve will soon begin cutting interest rates.

Investors are particularly focused on the upcoming Jackson Hole Symposium, set for Aug. 22-24. This event is seen as critical for gaining insight into the Fed's future policy direction.

Currently, Fed futures suggest a 73.5% chance of a 25-basis-point rate cut in September. Markets are also pricing in a cumulative 82 basis points in cuts by the end of the year, pointing to at least two more rate reductions in November and December.

These expectations have bolstered the bullish sentiment around gold. Lower interest rates generally make non-yielding assets like gold more attractive, as they diminish the allure of yield-bearing alternatives.

Adding to the momentum, the U.S. dollar has weakened sharply, hitting new 2024 lows against a basket of major currencies. As the dollar depreciates, gold—priced in dollars—becomes more affordable for foreign investors, further driving demand.

The chart below illustrates the inverse relationship between the U.S. Dollar Index, represented by the green line and tracked by the Invesco DB USD Index Bullish Fund ETF UUP, and gold prices, depicted by the yellow line and tracked by the SPDR Gold Trust GLD.

Year-to-date, gold has surged 22%, setting the stage for its best annual performance since 2020, when it gained 25%. If the current trend holds, 2024 could mark gold's second-best year since 2008, when it rocketed up by 29.6%.

While most gold bar transactions happen through authorized dealers, it’s becoming easier for individual investors to enter the market. Retail giants like Costco Wholesale Corp. COST, Amazon.com Inc. AMZN, and Walmart Inc. are also selling the bullion, providing a more accessible entry point for consumers.