Gold price hits $4,000 an ounce for the first time

Gold prices hit $4,000 for the first time on Tuesday as investors seek a safe haven from a weaker dollar, geopolitical volatility, economic uncertainty and stubborn inflation.

Golden future Closed at a record $4,004.40 an ounce, after hitting an intraday high of $4,014.60. Prices have increased by around 50% this year as the US Dollar Index fell 10% and President Donald Trump has upended the global trading system and threatens the independence of the Federal Reserve.

Central banks and retail investors are buying gold at a rapid pace. China and other countries are diversifying away from U.S. Treasurys and into gold after Washington imposed heavy sanctions on Russia over its invasion of Ukraine in 2022, and retail investors are seeking protection against inflation.

The latest leg higher in the precious metal came after the Fed cut interest rates in September for the first time this year, making short-term debt instruments like cash bills less attractive to investors. The market expects two additional cuts to the federal funds rate, now from 4.00% to 4.25%, before the end of the year. The Fed then meets in three weeks, on October 29.

Ray Dalio, founder of Bridgewater Associates, recommended Tuesday that investors put “something like 15% of your portfolio in gold.” Debt instruments are “not an effective store of wealth,” Dalio told the Greenwich Economic Forum in Connecticut.

Gold is “the one asset that does very well when the typical parts of your portfolio decline,” he said.

Bank of America urged investors Monday to approach gold with caution as prices headed toward $4,000. BOFA warned clients that gold faces “trend exhaustion,” which could lead to “consolidation or correction” in the fourth quarter.

– CNBC’s Yun Li contributed to this report.