Rate cuts should be good for bonds and dividends. So why is gold shining? – by David Berman (Globe and Mail – October 26, 2024)

https://www.theglobeandmail.com/

Central-bank rate cuts should be terrific for bonds and dividend-paying stocks. But another asset has been grabbing attention with better performance: gold. And some observers expect bullion will continue to dominate.

If this comes as a surprise, you’re probably not alone. As U.S. inflation subsided and the Federal Reserve cleared the way this year for cutting its key interest rate from multiyear highs, rate-sensitive assets rallied.

The yield on the 10-year U.S. Treasury bond, easily the most important benchmark for government bonds, was above 5 per cent a year ago. But by the time the Fed cut its key rate by half a percentage point in September, the yield had declined to about 3.6 per cent.

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