A MARTÍNEZ, HOST:
Gold was already having a good year, and it just broke another record. This week, the price of gold went above $4,000 an ounce for the first time ever. NPR finance correspondent Maria Aspan explains why that is not a good sign for the economy.
MARIA ASPAN, BYLINE: Gold is one of the oldest investments around, especially in times of turmoil. It's shiny and solid and widely seen as a safe haven when investors are worried about what else is going on in the world and especially in the United States.
JOSE RASCO: Gold usually rises if the dollar is weak.
ASPAN: That's Jose Rasco, chief investment officer for HSBC in the Americas. As he points out, the dollar is weak. It's down about 10% this year. That's in part because of all the uncertainty created by President Trump from his tariffs to how he's picking fights with the Federal Reserve. Investors around the world are worried about the long-term damage these policies could have on the broader economy. These worries aren't obvious. Stock markets have been hitting record high after record high. But dig a little deeper, and it's clear that investors are trying to hedge their bets and diversify away from the United States.
RASCO: Given all the uncertainty around policy, people said we're not sure about the dollar. And the dollar has depreciated as a result.
ASPAN: Now, the price of gold is already up about 50% this year - its best run in nearly half a century. And Goldman Sachs this week predicted that it will go up even more by the end of next year. Daan Struyven is Goldman's co-head of commodities research. He points out there's another factor here - the Fed is cutting interest rates.
DAAN STRUYVEN: When interest rates go down, demand for gold from investors tends to rise.
ASPAN: That's partly because lower rates can lead to higher inflation, and gold is a hedge against inflation. It can also just feel like a security blanket for nervous investors. After all, the last time gold was this hot was back in 1979, in the middle of a global energy and inflation crisis that made the world seem very uncertain.
Maria Aspan, NPR News, New York.
(SOUNDBITE OF SONG, "GOOD AS GOLD")
DOLLY PARTON AND PORTER WAGONER: (Singing) And that's as good as gold. Transcript provided by NPR, Copyright NPR.
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