The price of gold has reached a new all-time high above $2,660 per ounce after surging more than 30% so far this year, marking its best year-to-date performance of this century as the U.S. M2 money supply is reaching a new high.
As first reported by Zerohedge on the microblogging platform X (formerly known as Twitter), the price of gold has been surging amid a “relentless” performance that has seen it hit new records this year.
Its performance comes as the stock market’s benchmark index, the S&P 500, also reaches a record high of 5,735 according to CoinDesk, in rallies that appear to be linked to loose monetary policy from central banks that helped the M2 money supply surge.
Per CoinDesk’s report, the combined balance sheets of the top 15 central banks in the world topped $31 trillion as of September 25, a level that was last seen back in April as the figure has been rising for months.
The M2 money supply, which includes physical currency in circulation, savings and time deposits, and money market funds, has been growing every month since February and is now standing at $21.2 trillion according to Trading Economics.
China’s commitment to significant monetary easing, coupled with the U.S. Federal Reserve’s aggressive 50 basis point rate cut, has fueled market momentum. Notably, historical data shows a strong correlation between the S&P 500’s performance and the growth of M2 money supply, according to CoinDesk’s report.
Notably, cryptocurrency prices surged after the Federal Reserve’s aggressive rate cut, which meant that the correlation between cryptocurrency and US stocks surged to 67%, its second-highest level behind what was seen in the second quarter of 2022.
The correlation’s growth, according to The Kobeissi Letter, came after cryptocurrencies saw $321 million of inflows amid growing risk appetite. As reported, UBS has recently predicted that the price of gold has “further to run” and could even hit $2,700 pr ounce by June of next year as the U.S. dollar weakens amid rate cuts from the Federal Reserve.
Notably, Societe Generale has shifted 100% of its commodity allocation to gold, driven by geopolitical risks and a weakening broader commodity market.
The French bank increased its gold holdings to 7% of its total asset allocation, reflecting a 40% quarter-over-quarter rise. This pivot toward gold signals growing confidence in the yellow metal as a safe-haven asset amid ongoing uncertainties in global markets.
Featured Image via Unsplash
