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For the first time since 202o, the US <keyword id="19904332" type="General" weightage="100" keywordseo="Federal-Reserve" source="keywords" meta.keywordsubtype="org" meta.entityname="Federal Reserve" meta.hostid="261" meta.entityid="Federal Reserve">Federal Reserve</keyword> cut down the benchmark <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> by 50 basis points , bringing the target rate range to 4.75%-5%, from its previous scope of 5.25% to 5.5%. The decision, which was taken 11:1, was not unanimous, a striking departure from all other unanimous interest rate decisions taken by Fed over the last 2 years. Per chairman <keyword id="20058769" type="General" weightage="20" keywordseo="jerome-powell" source="keywords">Jerome Powell</keyword>, the decision was taken in light of easing inflationary pressures in the US economy, which came down to 2.53% this month, as opposed to 2.89% a month prior, and 3.67% last year. "In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective", the FOMC committee highlighted in its statement. Signaling more aggressive rate cuts going ahead, Fed projections implied an additional 50 bps rate cut from current levels within 2024, with rate trims going as high as 100 bps in 2025, and another 50 bps in 2026. Notably, last month, Powell had strongly hinted towards a rate cut, saying it was "time for policy to be adjusted". Over the last few years, high interest rates had made home equity loans and credit card interest rates super expensive. In March 2022, which was the first time Fed hiked interest, rates on home equity loans stood at 5.96%%. This has jumped to 8.49% in September 2o24. At 20.78%, credit card interest rates have also been sky-high, swelling by over 400 basis points since March 2022. Indian markets stay flat On Wednesday, Indian equity markets maintained a cautious outlook, with <keyword id="19950208" type="General" weightage="20" keywordseo="BSE-Sensex" source="keywords">BSE Sensex</keyword> and Nifty50 dipping by 0.16% each to close the day in red. During the day, both Sensex and Nifty scaled record highs of 83,326.38 points, and 25.377.55 points respectively. Most market experts anticipated a 25-bps rate cut, but with Fed delivering a mammoth-size cut, the focus is now set to shift from inflation to unemployment, with the rate cut offering much-needed, immediate relief to US economy, which has, for long, been battling high borrowing costs. Per Fed officials, unemployment is set to rise to 4.4% this year, up from its present rate of 4.2%, as recorded in August. Per Bloomberg reports, shortly after the announcement, gold prices also jumped to record highs. The prices of yellow metal were already hovering near all-time highs ahead of the announcement. A rate cut pushes to weaken the greenback, which is what gold is priced in internationally. This makes bullion cheaper, pushing up its demand globally.

Fed trims interest rates by 50 basis points, gold prices touch record-high

<ul class="summary-list"><li><keyword id="19979912" type="General" weightage="100" keywordseo="mortgage-rates" source="keywords">Mortgage rates</keyword> are falling but remain high compared to the rates of the past few years.</li><li>Assumable mortgages can help <keyword id="19907145" type="General" weightage="20" keywordseo="homebuyers" source="keywords">homebuyers</keyword> get lower rates and reduce their monthly payments.</li></ul>Over the past few years, <a target="_blank" href="https://www.businessinsider.com/personal-finance/mortgages/average-mortgage-interest-rate">US mortgage rates</a> have fluctuated wildly, leaving both homebuyers and sellers scrambling. In 2021, rates fell to as low as 2.1% as the <a target="_blank" href="https://www.businessinsider.com/how-fed-rate-cut-could-impact-mortgage-rates-homebuyers-2024-9">Federal Reserve</a> acted to keep the economy ticking during the COVID-19 pandemic. But then inflation spiked. To cool inflation, the Fed implemented a series of rate hikes, pushing mortgage rates to a peak of 7.79% in October 2023, according to data tracked by the <keyword id="19904332" type="General" weightage="20" keywordseo="Federal-Reserve" source="keywords" meta.keywordsubtype="org" meta.entityname="Federal Reserve" meta.hostid="261" meta.entityid="Federal Reserve">Federal Reserve</keyword> Bank of St. Louis. But over the last few years, some homebuyers have used a workaround to get lower rates anyway: a lesser-known loan option called an <keyword id="23243178" type="General" weightage="20" keywordseo="assumable-mortgage" source="keywords">assumable mortgage</keyword>. Assumable mortgages let qualifying buyers take over a seller's existing loan, including its interest rate, principal balance, and other terms. This can lead to significantly lower <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword>, making monthly mortgage payments more affordable and saving thousands over the life of the loan. It's important to note that not all loans are eligible for assumption, but ones backed by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) are. 2024, however, has brought some relief from high rates. In January, <a target="_blank" href="https://www.businessinsider.com/fed-cut-lower-mortgage-rates-should-you-refinance-2024-9">rates</a> hit about 6.7% and have been slowly decreasing since. According to Freddie Mac, the 30-year fixed-rate mortgage dropped to 6.2% as of mid-September, its lowest level since February 2023. The Federal Open Market Committee, which oversees US monetary policy, is expected to <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-decision-this-week-federal-reserve-powell-inflation-2024-9">cut interest rates</a> at its <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/banking/when-is-the-next-fed-meeting">meeting</a> this week. This could lead to further declines in mortgage rates in the coming months. Still, the 2%-ish rates of 2021 aren't likely to return as the Fed remains wary of inflation. So while additional rate declines may ease monthly mortgage payments for some, they won't necessarily make homebuying significantly more affordable for most Americans. For that reason, assumable mortgages still might be the best option for some people to get the lowest rates. Here are the stories of three homebuying couples who secured mortgage rates below 3% since March 2023 using assumable mortgages. They described how they redirected the funds they would have spent on higher monthly mortgage payments into healthcare, renovations, or retirement. <h2>One couple got a 2.6% rate and became the youngest homeowners in their families</h2>In 2022, <a target="_blank" href="https://www.businessinsider.com/first-time-buyers-got-lowest-best-interest-rate-assumable-mortgage-2024-3">Grace Lucchese</a> had just graduated from college. Her partner, Mickey Ricard, had finished his military service two years prior. The Gen Z couple had moved into an apartment in Lucchese's hometown of Sudbury, Massachusetts — a town about 40 minutes outside Boston — and found themselves spending much of their incomes on rent. "We were paying ridiculous <a target="_blank" href="https://www.businessinsider.com/rental-market-housing-affordability-real-estate-apartments-2024-1">prices for rent</a>, and our money was going nowhere," Lucchese told Business Insider. "We also have a dog with special needs, so we wanted to find a home with a backyard." <div type="image" title="Grace Lucchese, Mickey Ricard, and their dog at home." height="1701" width="2268" msid="113465770" hostid="261"></div>For the first-time homebuyers, finding an affordable, well-maintained home in their area was challenging. "During our homebuying search, we looked all around Boston," Lucchese said. "We could not find a home that was move-in ready and under $650,000. We put offers on probably seven different homes and got into bidding wars on two." After months of searching and nearly giving up, Lucchese and Ricard finally found their perfect home: a 1,600-square-foot, two-story Colonial built in 1885 with three bedrooms and one bathroom. The home also came with an assumable mortgage. "Our home was originally listed for $429,000," Lucchese said. "When we were <a target="_blank" href="https://www.businessinsider.com/real-estate-investing-how-to-negotiate-best-price-down-2023-4">negotiating with the seller</a> and trying to talk him down on the price, they brought up the assumable loan — I had no clue what that type of mortgage was." After learning about assumable mortgages and realizing they could take over the homeowner's 2.6% rate, they jumped at the opportunity. <div type="image" title="Grace Lucchese and Mickey Ricard's Massachusetts home." height="3024" width="4032" msid="113465773" hostid="261"></div>In January, they made a $13,000 down payment and bought the home for $422,500. With homeowners' insurance included, their monthly payments are around $2,100 — about half of what they would likely pay if they had gotten a traditional mortgage earlier this year. Their mortgage term is 26 years. The couple, now the youngest homeowners in both of their families, are using their monthly savings to renovate their home and help cover their dog's veterinary expenses. "Now that our assumable mortgage is saving us about $2,000 each month, it makes the stress a little less because we have the option of having more money available," Lucchese said. <h2>Retirees who got a 2.75% rate say their lives are easier</h2>In June, <a target="_blank" href="https://www.businessinsider.com/homebuyer-got-low-mortgage-interest-rate-assumable-mortgage-save-retirement-2024-7">Brian Sankey</a>, a retired military police officer, purchased a $400,000 home in Elizabethtown, Kentucky — a small town south of Fort Knox — with an assumable Veterans Affairs, or VA, mortgage. The loan has a 2.75% interest rate and 26 years remaining on its 30-year fixed-rate term. Sankey said it was "a win-win" situation for him and the seller. "The benefit of a loan assumption for the seller was that it allowed them to sell their home at a higher price," Sankey told BI. "For my wife and me, it allowed us to get a lower interest rate." <div type="image" title="Brian Sankey on the beach." height="1200" width="1600" msid="113465776" hostid="261"></div>Sankey said he learned about the assumption feature of Veterans Affairs mortgages years ago but had forgotten about it over time. It wasn't until he came across the four-bedroom, four-bathroom home in Elizabethtown that his memory was jolted. The home's proximity to an Army base led Sankey to suspect that the sellers might be connected to the military and have taken out a VA loan, making an assumable mortgage possible. He was right. However, getting the seller on board wasn't as easy as Sankey had hoped. "They weren't inclined to do it at first because they felt the assumption process would take too long, and they were looking for a quick sale," he said. "But after about 30 days, they realized that cash buyers wouldn't be throwing money at them and agreed to proceed with the assumption." According to Sankey, the assumption process took just about six weeks from the time he and his wife first viewed the home to closing the loan. "I'm happy I remembered it because it made our home purchase more affordable," he said. "Despite the current market conditions and higher interest rates, my wife and I were able to purchase a larger home with lower monthly payments." A smaller mortgage is allowing Sankey and his wife to <a target="_blank" href="https://www.businessinsider.com/personal-finance/how-much-do-i-need-to-retire">retire more comfortably</a>. "I can now use the money I would have spent on high-interest payments to cover living expenses," Sankey said. "We should also have more discretionary income." <h2>A couple is able to pay down medical debts after buying a house in Oregon</h2>In 2022, <a target="_blank" href="https://www.businessinsider.com/couple-got-low-mortgage-when-everyone-getting-high-interest-rate-2024-3">Amy Yzaguirre</a> was diagnosed with cancer. At the time, she and her son were living in Idaho while her husband looked for a job in Oregon. They had planned to reunite in Oregon after he found one and their Idaho home sold. However, following her diagnosis, the couple decided it was best to be together before the Idaho home was sold. Faced with the financial burden of paying the Idaho mortgage and Oregon rent at the same time, they moved into an RV on her parents' property in Tigard, a suburb about 20 minutes outside Portland. "It was pretty rough, but we made it work," Yzaguirre told BI. They lived rent-free in the RV for months while waiting for their Idaho home to sell and Yzaguirre to recover. Then, they began searching for a home to buy in Tigard. <div type="image" title="Amy Yzaguirre and her husband pose in front of the RV they purchased." height="542" width="720" msid="113465772" hostid="261"></div>It wasn't the experience they had hoped for. "It's funny how an area can be a nice, family-friendly, affordable place to live and then suddenly become overpopulated and much more expensive," she said. They eventually toured a townhome in nearby Sherwood listed for $416,000. The seller's flyer noted that a buyer could take over their 2.5% mortgage rate. "I did the math," Yzaguirre said. "The seller was locked in at 2.5%, so if we qualified to assume the loan, our mortgage would be a little over $2,100 a month versus the over $3,000 we would be paying with a traditional mortgage at current market rates. It would save us over $40,000 in the long run." <div type="image" title="Amy Yzaguirre, her husband, and son." height="3024" width="4032" msid="113465778" hostid="261"></div>In March 2023, the couple purchased the townhome for $418,900. They made a down payment of $48,000 and assumed a 30-year fixed-rate FHA loan with an interest rate of 2.5%. They have 28 years left on their mortgage. The money they are saving each month is helping them pay down Yzaguirre's bills. "Even though I was fortunate to have good insurance during chemotherapy and have excellent insurance through my current job, I still had quite a few medical bills to pay off," she said. "With the extra money we have saved on our mortgage payment, I've been able to pay them down." The family also used some of their extra funds to pay off other debts and purchase a Toyota Tacoma pickup truck with cash, covering the full amount upfront Correction: September 19, 2024 — An earlier version of this story misspelled Mickey Ricard’s last name.

3 couples who recently got mortgage interest rates under 3% share how they did it

Domestic <keyword id="19910265" type="General" weightage="100" keywordseo="gold-prices" source="keywords">gold prices</keyword> have risen by 10% on a year-to-date basis on the back of the strength in global gold prices, which have surged by 18% year-to-date, driven by robust <keyword id="19894998" type="General" weightage="20" keywordseo="central-bank" source="keywords">central bank</keyword> purchases, heightened geopolitical risks, and growing expectations of a monetary policy pivot from the <keyword id="19901377" type="General" weightage="20" keywordseo="us-federal-reserve" source="keywords">US Federal Reserve</keyword>, according to the <keyword id="20195223" type="General" weightage="20" keywordseo="World-Gold-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="World Gold Council" meta.hostid="153" meta.entityid="World Gold Council">World Gold Council</keyword>. The reduction in <keyword id="20069572" type="General" weightage="20" keywordseo="import-duty" source="keywords">import duty</keyword> has ignited a resurgence in gold demand across <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>. Reports from the recently concluded India International Jewellery Show indicate a substantial increase in order bookings from retailers, particularly in preparation for the upcoming festive and wedding season. Manufacturers have noted that in some cases, orders have reached levels not seen in several years, underscoring the strong buying interest among <keyword id="21595593" type="General" weightage="20" keywordseo="jewellery-retailers" source="keywords">jewellery retailers</keyword> and consumers alike. The trend of bar and coin buying has also remained robust, with both consumers and jewellers capitalizing on the more attractive prices to stock up for future manufacturing needs. Historical analysis suggests that Indian consumer demand, encompassing jewellery and bar and coin demand, could see an additional 50 tonnes or more in the second half of 2024. This potential increase is fueled by a combination of an initial boost in consumer appetite due to the more attractive prices and a longer-term alignment of local prices with international rates. In a notable shift, domestic gold prices, which had been trading at a discount to international prices for five consecutive months, have now started trading at a premium following the <keyword id="19908389" type="General" weightage="20" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> announcement. The discount had widened significantly in July, reaching a peak of around $80 per ounce in the third week of the month, driven by subdued demand and an increased supply of gold through various preferential trade agreements and unofficial channels. However, wholesalers who had inventory purchased under the old customs duty regime began selling gold at a premium to the landed cost to mitigate their losses, further supported by increased consumer demand. While the premiums have moderated recently, from $28 per ounce to around USD 5 per ounce, this shift highlights the changing market sentiment and the impact of rising international gold prices and potential inventory valuation adjustments. The changes introduced in the Union Budget, including a reduction in the long-term investment holding period and a lower tax rate, have made gold ETFs a more attractive investment option. Data from the Association of Mutual Funds in India (AMFI) reveals that net inflows into gold ETFs in July amounted to Rs 13.4 billion (approximately USD 160 million), marking the highest monthly inflows since February 2020 and an 84% increase compared to June 2024. Despite these inflows, the total assets under management (AUM) for Indian gold ETFs grew marginally by 0.3% from the previous month, reaching Rs 345 billion ($4.1 billion). This modest increase can be attributed to the 8 % fall in domestic gold prices following the import duty reduction. Year-to-date, net inflows into Indian gold ETFs have totalled Rs 45 billion ($543 million), with total AUMs rising by 48 % from a year ago. The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="153" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) has continued its gold purchasing trend, although at a slower pace following a significant increase in June, when purchases reached 9.3 tonnes--the highest monthly total in nearly two years. Year-to-date, the RBI's gold acquisitions have totaled 44.3 tonnes, surpassing the total purchases of the past two years combined. The RBI's gold reserves have now reached a record 849 tonnes, representing 8.8% of total foreign reserves, compared to 7.5 % a year ago. In July, gold imports remained steady at $3.1 billion, maintaining the stable trend observed over the previous three months. Between April and July, imports averaged $3.2 billion, with volumes ranging between 43 and 47 tonnes during this period. The gold import bill for July 2024 was 11 % lower than the previous year, with an estimated 26% decrease in volume terms, around 47 tonnes. Despite a surge in international gold prices, domestic gold prices in India have experienced a notable decline, primarily due to the 9 % reduction in import duty announced in the Union Budget 2024-25. This policy change has led to a 6% decrease in the landed cost of gold, marking a shift in the domestic gold market dynamics.

Domestic gold prices surge 10% amid global price rally, central bank buying: World Gold Council

Our experts answer readers' investing questions and write unbiased product reviews (<a href="https://www.businessinsider.com/personal-finance/investing-rating-methodology" class="not-content-link" target="_blank">here's how we assess investing products</a>). Paid non-client promotion: In some cases, we receive a commission from <a href="https://www.businessinsider.com/personal-finance/our-partners" class="not-content-link" target="_blank">our partners</a>. Our opinions are always our own.<ul class="summary-list"><li>Set by the Federal Reserve, the federal funds rate is the interest banks charge each other to borrow money overnight. </li><li>Changes in the federal funds rate influence the interest rates on loans, credit cards, and bank accounts.</li></ul>The major mandate of the <a href="https://www.businessinsider.com/personal-finance/what-is-the-federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> is to keep the US financial system solvent and manage its money supply (the amount of cash and readily available funds in circulation). It does this through a balancing act involving interest rates — specifically one called the federal funds rate. <h2>What is the federal funds rate?</h2>The federal funds rate (or fed funds rate, for short) is only used between banks. It's not an interest rate an individual can apply for or a financial account will earn. But it's a key benchmark. After the Fed sets it, the federal funds rate becomes a basis for interest charged on loans and credit card purchases, and the return offered by <a href="https://www.businessinsider.com/personal-finance/what-is-fixed-income-investing" target="_blank" rel="noopener">fixed-income investments</a>, like bonds and <a href="https://www.businessinsider.com/personal-finance/what-is-an-annuity" target="_blank" rel="noopener">annuities</a>. The level of interest rates — how cheap or expensive it is to borrow money — affects business and consumer spending. So, through the federal funds rate, the Fed tries to keep the entire economy on course. Here's how it works, and the ways it can affect you.<h2>How does the federal funds rate work?</h2>The federal funds rate, also known as the overnight rate, is the interest commercial banks charge when they lend money to one another for extremely short-term periods — literally, overnight. The Fed mandates this activity between banks to ensure they meet their reserve requirements. That is, it requires each bank to maintain enough cash on hand, plus a reserve balance with the central bank, to cover a certain percentage of its deposits and other liabilities on every business day. These regulations are to make sure that a bank's account-holders always have ready access to their money. If banks are short on funds to maintain their reserve requirement, they borrow from another — at (or very close to) the fed funds rate.There are two types of federal funds rates:<ol><li>The federal funds effective rate is the weighted average of all the interest rates banks pay when they borrow from other banks in the country.</li><li>The federal funds target rate is the rate set by the Federal Open Market Committee (FOMC), the Fed's monetary policy-making body, to serve as the guidepost for what banks charge one another. Made up of the Fed's Board of Governors and five regional Federal Reserve Bank presidents, the FOMC meets at least eight times a year to decide the federal funds rate based on prevailing economic conditions.</li></ol>When people refer to the Fed "slashing the interest rate" or "raising interest rates," they usually mean the federal funds target rate.Get Exclusive Savings with RaisinOpen one of the<a href="https://www.businessinsider.com/personal-finance/best-high-yield-savings-accounts-rates-right-now"> best savings accounts</a> with a no-fee<a href="https://www.businessinsider.com/personal-finance/raisin-review"> Raisin</a> account in minutes and spread your savings across an exclusive network of over 30 FDIC-insured banks and NCUA-insured credit unions. Earn top savings rates and manage it all with a single secure login.<h2>How does the federal funds rate affect the economy?</h2>During its eight meetings a year, the FOMC can raise, lower, or keep the fed funds rate the same. But what motivates the committee to periodically change it? How does the Fed use it as an economy-adjusting tool?When it needs to stimulate economic growth — production, spending, expansion — the Fed lowers the fed funds rate. This move makes it cheaper for banks to borrow money and maintain their reserves. So these banks can then lend out their extra funds at lower costs, encouraging companies and individuals to borrow to expand, invest, and buy things. It increases the money supply in the system, in technical terms.In contrast, when the Fed needs to slow down the economy — say, because prices are climbing too fast, causing rampant inflation — it raises the fed funds rate. To prevent their required reserve balance from going into the red, member banks have to pay more interest. They then raise their interest rates to clients, which tends to slow down any form of borrowing activity. When banks don't finance as much, the money supply contracts, and economic growth goes back to more sustainable levels. <h2>How does the federal funds rate affect you?</h2>The federal funds rate is an interbank interest rate. But it has a ripple effect throughout people's financial lives, the interest they pay, and the money they earn. Among its effects:<ul><li>Prime rate: How the fed funds rate moves influences the movement of a number of interest rates, one of the most significant being the <a href="https://www.businessinsider.com/personal-finance/what-is-the-prime-rate" target="_blank" rel="noopener">prime rate</a>. The prime rate is the rate a bank can offer its best corporate or high-net-worth individual clients. </li><li>Consumer loans and accounts: A shift in the prime rate influences consumer interest rates as well. When the prime rate rises or drops, you can expect a corresponding adjustment on the monthly charges of your personal loans, credit cards, and <a href="https://www.businessinsider.com/personal-finance/how-does-fed-impact-mortgage-rates">adjustable-rate mortgages</a>. If they pay fluctuating interest, your bank accounts and CDs also earn more or less.</li><li>US Treasuries and other bonds: Changes in the fed funds rate can be paralleled in the interest rates paid by newly issued <a href="https://www.businessinsider.com/personal-finance/how-to-buy-treasury-bonds" target="_blank" rel="noopener">Treasury notes and bonds</a>. These in turn serve as a benchmark for <a href="https://www.businessinsider.com/personal-finance/what-is-a-corporate-bond" target="_blank" rel="noopener">corporate bond</a> rates. </li><li>Stocks: A decrease in the feds fund rate can send <a href="https://www.businessinsider.com/personal-finance/best-stock-trading-apps">stocks</a> soaring, while an increase can push the market to decline. </li><li>Employment: When interest rates go down, it encourages consumers to buy more goods and services. In turn, this propels businesses to meet the demand by expanding production, hiring more workers, and raising wages.</li></ul><h2>Federal funds rate FAQs</h2><h3 class="faq-question">What happens when the federal funds rate is high?</h3>High fed funds rates make all kinds of borrowing costs more expensive. The interest rates on everything from mortgages to credit cards and auto loans are all influenced by the federal funds rate.<h3 class="faq-question">Is the federal funds rate the same as the prime rate?</h3>The prime rate is the interest rate that banks charge their most creditworthy clients. It is usually about 3% above the federal funds rate.<h3 class="faq-question">Who sets the federal funds rate?</h3>The Federal Open Market Committee (FOMC), the Fed's monetary policy-making body, sets the federal funds rate. Members meet once about every six weeks to discuss economic conditions and decide whether to increase, decrease, or leave the federal funds rate unchanged.

What is the federal funds rate?

<ul class="summary-list"><li>Fed easing hasn't led to lower mortgage rates, with the 30-year fixed rate actually rising since the first rate cut.</li><li>Mortgage rates are closely linked to the 10-year US Treasury yield, which have also risen over the period.</li></ul>The Federal Reserve's <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/fed-interest-rate-cut-ai-stocks-nvidia-broadcom-asml-tech-2024-9">jumbo interest-rate cut in mid-September</a> was welcome news to prospective homebuyers, with the expectation that a lower fed funds rate would help push mortgage rates lower.Instead, the opposite has happened.Since Fed Chair Jerome Powell lowered interest rates by 50 basis points on September 18, the average 30-year fixed mortgage rate has moved higher, not lower.According to <a target="_blank" class="" href="https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed">data from Mortgage News Daily</a>, the average 30-year fixed mortgage rate has jumped about 47 basis points since the Fed rate cut, to 6.62% from 6.15%.The increase has aligned with a shift in how investors are viewing the Fed's path of future rate cuts, a pivot that <a target="_blank" class="" href="https://www.businessinsider.com/economy-outlook-impact-of-rate-cuts-10-year-treasury-yields-2024-9">started even before the September move</a>. The 10-year Treasury yield — which is strongly correlated with mortgage rates — has also risen since the rate cut, signaling that investors feel good about the economy and are pricing in less easing going forward.This was reinforced last Friday when a <a target="_blank" class="" href="https://www.businessinsider.com/september-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-10">red-hot jobs report</a> showed a surprise decrease in the unemployment rate and blowout nonfarm-payroll additions."Mortgage rates have increased since the September Fed meeting because longer term rates have also increased, mostly as a function of markets pricing in lower recession odds, thanks to strong payroll data especially," Carson Group global macro strategist Sonu Varghese told BI.Now some economic commentators are saying <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-fed-outlook-recession-economy-stocks-ed-yardeni-2024-10">rate cuts should be done for the year</a>, an outcome that would fail to deliver on long-held expectations of extended easing — and one that would likely mean limited future declines in the mortgage rate.<h2 id="12d543b7-d720-47f9-9de7-fe8198291286">The way forward</h2>The conundrum around high mortgage rates is ultimately a catch-22.If the Fed is no longer going to aggressively cut interest rates, a jump in home sales would be the clearest path to cheaper mortgages. But lofty mortgage rates are keeping that activity from increasing, and people are staying put in their homes and not putting them on the market.Going forward, the situation hinges on the Fed's rate-lowering schedule. At present time, market expectations — as calculated by the <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">CME FedWatch tool</a> — are for two more 25-basis-point cuts this year.Whether that will manifest itself in lower mortgage rates is up in the air. Two major upcoming events are the Consumer Price Index release this Thursday, as well as the October jobs report in the first week of November.What those say about the health of the economy and the state of inflation will go a long way towards recalibrating the expected path of Fed easing. If it's concluded that substantially more relief is needed, downward movement could be seen. But if the economy continues to show signs of strength — and possibly persistently sticky inflation — mortgage-rate optimists may be out of luck.

Rate cuts were supposed to push mortgage rates lower. The opposite has happened.

In early Wednesday trading, the Indian rupee slid 14 paise to hit an all-time low of 84.23 per US dollar, weighed down by continued outflows of foreign funds and a robust US dollar in global markets. Forex analysts highlighted the volatility stemming from the ongoing US elections, suggesting that stability could return once results are clear in this close race. The US Federal Reserve is also on the radar, with an anticipated interest rate cut this week and a projected easing of up to 100 basis points by 2025. At the interbank forex market, the rupee opened at its historic low of 84.23 against the dollar, down from its previous close of 84.09. On Tuesday, the currency had ended slightly stronger, gaining 2 paise. Meanwhile, the dollar index, which tracks the strength of the US dollar against six major currencies, climbed 1.64% to 105.11. According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, the index rose following initial election results showing former President Trump ahead, with the Republican party also leading in both the Senate and the House of Representatives. The global oil market saw movement as Brent crude prices dipped 0.98%, trading at USD 74.79 per barrel. Bhansali noted that the rupee’s trajectory will heavily depend on the Reserve Bank of India’s (RBI) response, particularly as the currency fluctuates with real-time election outcomes. He estimated an intra-day trading range between 84.00 and 84.35. On the domestic front, Indian stock markets showed positive trends. The Sensex climbed by 390.93 points (0.49%) to reach 79,867.56, while the Nifty rose by 135.60 points (0.56%) to 24,348.90. Despite these gains, foreign institutional investors (FIIs) were net sellers on Tuesday, pulling out Rs 2,569.41 crore from the capital markets, as per stock exchange data. This withdrawal underscores the challenges facing the Indian currency amid global financial uncertainties. (with PTI inputs)

Rupee hits record low of 84.23 against US dollar amidst US elections 2024

<ul class="summary-list"><li>The market is underestimating how much the Federal Reserve's will cut rates in 2025, Goldman Sachs says.</li><li>The Fed fund rate will drop to 3.25-3.50% by the end of 2025, the bank estimates.</li></ul>Markets are underestimating how much the Federal Reserve is going to cut interest rates next year, Goldman Sachs predicted.In the bank's latest macro outlook, it estimated that the Fed funds rate could drop to 3.25%-3.5% in 2025.That's considerably below what investors see as the highest-probability outcome, as calculated by the <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">CME FedWatch Tool</a>. It currently sees a 30% chance of rates being in the 3.75%-4.0% range by the end of next year.The disconnect reflects the degree to which investors are wary about the potentially <a target="_blank" class="" href="https://www.businessinsider.com/inflation-october-cpi-consumer-price-index-federal-reserve-interest-rates-2024-11">inflationary effect</a> President-elect Donald Trump's policies could have. The Fed generally tackles inflation by raising interest rates, which is seen challenging the central bank's plan for further easing.But Goldman forecasts that Trump's tariffs might actually justify rate cuts by prompting an economic slowdown in the early going. In these situations, the Fed eases monetary policy to revive activity."If anything, the threat of a near-term growth drag from tariffs and the Fed leadership's continued preference for frontloaded policy normalization have strengthened our confidence in sequential cuts through early next year," Goldman analysts led by chief economist Jan Hatzius wrote on Thursday.As for reinflation concerns, Goldman assumes that Trump's tariffs will only target China and auto exports coming from Europe and Mexico. In this scenario, US core inflation would reach a "benign" level of 2.4% by late 2025.However, if the incoming president follows through on a pledge to implement across-the-board 10% tariffs on all US trade, that figure would rise to 3.1% by early 2026.Still, Goldman noted that disinflation has been ongoing globally, and is a trend that is likely to keep up."Against this backdrop, we do not expect the US election outcome to derail the policy normalization process that is currently underway, and see most major central banks easing significantly further through 2025," the note said.To be sure, Goldman acknowledged that Trump's policies remain uncertain, creating the risk of an earlier stopping point for the Fed's cutting cycle. Much of this will depend on the Fed's willingness to respond preemptively to future inflation boosts.But for now, growth risks are the Fed's key priority, Goldman noted.

Investors are underestimating how deep rate cuts will be in 2025, Goldman says

<keyword id="19991358" type="General" weightage="100" keywordseo="Indian-markets" source="keywords">Indian markets</keyword> are navigating choppy waters as global economic shifts, from rate cuts to evolving political climates, create new pressure points across the financial landscape, according to a recent report by ANI attributed originally to the Union Bank of India. The domestic stock and bond markets showed signs of strain, with <keyword id="19910363" type="General" weightage="20" keywordseo="bond-yields" source="keywords">bond yields</keyword> witnessing slight adjustments. India’s 10-year government bond yield dipped to 6.82%, a decrease from the previous session, reflecting cautious investor sentiment as the markets react to shifting global indicators. Meanwhile, the 5-year bond yield remained steady at 6.76%, a signal of lingering hesitation amid economic unpredictability. In the currency market, the rupee faced a notable decline, ending the day at ₹84.3725 against the US dollar, slipping from its prior close of ₹84.2800. Market analysts point to significant capital outflows as a key factor, with investors moving funds to perceived safer assets overseas. This migration has weighed heavily on the rupee, underlining the currency’s vulnerability in an environment of global economic flux. India’s stock market bore the brunt of this volatility, with key indices falling over 1%, effectively erasing the gains of a previous rally. This abrupt drop reportedly reflects renewed investor anxiety, largely triggered by the recent <keyword id="20189882" type="General" weightage="20" keywordseo="US-presidential-election" source="keywords">US presidential election</keyword> results. Experts suggest that the election has introduced a fresh layer of uncertainty, not only for the US economy but for global markets, impacting everything from policy decisions to investor sentiment. Analysts are also keeping a close eye on upcoming decisions by central banks, which will likely shape the path forward for the Indian equities market. Commodities showed contrasting trends, with Brent crude prices falling on lower demand expectations, as economic indicators point toward cautious spending globally. Gold, on the other hand, experienced a modest rise as investors sought refuge in safe-haven assets, highlighting a shift towards risk aversion among market participants. Globally, major central banks made coordinated efforts to sustain economic growth, with the Bank of England (BoE) announcing a 25 basis-point cut, lowering its benchmark rate to 4.75%. The BoE’s Monetary Policy Committee (MPC) largely backed this move to counter inflation, which has been declining, albeit gradually. Across the Atlantic, the US Federal Reserve mirrored this action with its own 25 basis-point cut, a sign of confidence in the ongoing economic recovery. Both rate cuts, though modest, signal a global trend towards caution as economies work to balance growth with stability. In Asia, the People’s Bank of China (PBoC) maintained its supportive stance. Governor Pan Gongsheng sought to reassure foreign investors by reaffirming the PBoC’s commitment to growth-oriented policies. Pan emphasized enhanced communication and pledged to open China’s financial services sector further, aiming to attract more international participants. Europe, meanwhile, faced mixed economic signals. Germany reported a steep 2.5% drop in industrial production in September, signalling a slowdown in manufacturing, while the Eurozone saw a mild 0.5% rise in retail sales, reflecting cautious consumer optimism in the region. Adding another layer to the global economic landscape, the European Union’s Climate Change Service warned that 2024 could be the hottest year on record, underscoring urgent climate challenges just as the UN COP29 climate summit approaches. The summit, set to take place in Azerbaijan, aims to rally increased funding for climate action, though tempered expectations linger in light of recent US political shifts. On the domestic front, Niti Aayog CEO BVR Subrahmanyam spoke about India’s potential role in pivotal global trade agreements, specifically the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These partnerships, Subrahmanyam suggested, could bolster India’s Micro, Small, and Medium Enterprises (MSME) sector, which currently accounts for 40% of India’s exports, offering a strategic advantage for Indian trade in an interconnected world. As the Indian markets digest these developments, experts believe continued volatility could be the theme for the coming months. (with ANI inputs)

Indian markets under pressure as global rate cuts stir uncertainty, new report says

Ah, <keyword id="18712" type="General" weightage="20" keywordseo="Gold" source="Orion">gold</keyword>! The shiny metal that's been making humans lose their minds since time immemorial. And yet, from King Midas to our neighbourhood aunty and even our moms (and secretly dads), everyone seems to have a super soft spot for the bullion. But here's the kicker: right now, gold prices are breaking all records on their upward trajectory! As of today, prices of 24k carat gold have passed the Rs 80,000 mark per 10 grams. And if experts are to be believed, this train isn't stopping anytime soon! So, as shiny as gold might look, adding even a bit of its glitter as we start decking up for the festive season might not be so easy on your pockets. But let's admit it—we love our gold and can't live without it. No wonder India is the second-largest consumer of the yellow metal in the world, only behind <keyword id="1334" type="General" weightage="20" keywordseo="China" source="Orion">China</keyword>. Such is our fondness for the metal that the <keyword id="20195223" type="General" weightage="20" keywordseo="world-gold-council" source="keywords">World Gold Council</keyword> had to up our 2024 annual demand forecast to 850 tonnes, up from the previously estimated 750 tonnes. However, our love for gold isn't just about looking fabulously embellished and blinding people with its bling. Indians also see gold as a long-term, trusty investment, supporting our other hard-earned assets, especially when high <keyword id="22195" type="General" weightage="20" keywordseo="Inflation" source="Orion">inflation</keyword> rates pull our returns down. After all, while inflationary pressures generally weaken the purchasing power of our regular paper money, gold is built differently. When the world is buckling to inflation, gold gains value during these times. This is also why it is considered a solid hedge against inflation. With Diwali and Dhanteras knocking at our doors, the inflation demon continued to bother India like a guest who refused to leave. Just last month, the Consumer Price Index (CPI) stood at 5.49%, much higher than the anticipated levels. Moreover, the diverging policy stances among central bankers worldwide, growing geopolitical tensions, tough job markets, and extreme weather events are only adding to the uncertainty. In such economically uncertain times, what should your gold strategy be this festive season? To buy or not to buy, that is the question. Well, let’s get to it. <h2><keyword id="20050894" type="General" weightage="100" keywordseo="gold-etfs" source="keywords">Gold ETFs</keyword> to the rescue</h2>See, buying physical gold jewellery is certainly a flex, but also a financial fuss. First, you pay a heavy amount to buy gold. Not to mention all those extra, hefty jewellery-making charges. And then you pay even more money to keep it safe in a bank locker, lest it get stolen. But what if we tell you that you can own pure <keyword id="3311599" type="General" weightage="20" keywordseo="24K-gold" source="Orion">24k gold</keyword>, minus all these frills? Welcome, Gold ETFs (Exchange Traded Funds). Simply put, gold ETFs are like the cool cousins of your traditional gold investments. Instead of stashing gold bars under your mattress like those maniac millionaires we see in Bollywood films, you can now invest and trade in gold through the stock market. It's basically buying units of an ETF on the stock exchange that directly mirror the ongoing domestic prices of gold. Generally, gold ETFs are equivalent to 99.5% pure physical gold bars, and each ETF unit denotes actual, one gram of gold. And let's face it, who would not want that golden glow in their lives? Gold ETFs have witnessed an over seven-fold surge in their AUM (assets under management) in just the last five years. From Rs 5,613.22 crore in September 2019 to Rs 39,823.50 crore in September 2024, gold ETFs seem to be in-thing. Inflows in gold ETFs have shot up by a whopping 2,695% over the last 5 years. In September 2019, gold ETFs had garnered a mere Rs 44.11 crore. Compare that to the inflows worth Rs 1,232.99 crore gold ETFs received last month. Talk about growing, or glowing popularity! In fact, in just 2024, inflows in gold ETFs have surged by nearly 88% since the beginning of this calendar year. From Rs 657.46 crore in January 2024 to Rs 1,232.99 crore in September 2024, good old gold is never out of season. <h2>So, how do these ETFs work? Should I invest in them now?</h2>All you need is a Demat account. Log into your account, choose the gold ETF scheme you want to invest in, and voila! You’re now a bullion-aire! All your gold ETF units will be stored in this account. Then, you can buy and sell gold ETFs just like you buy shares—in real-time. So, if gold prices inch upwards, which is where gold is currently going, the value of your ETF units will also rise in lockstep. Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, says that of late, gold ETFs have been increasingly gaining popularity among investors due to the liquidity, safety and transparency they offer. "With the escalating global geopolitical tensions boosting the ‘safe-haven’ appeal of the bullion, investors are preferring to park their funds in gold ETFs as compared to investing in physical gold, as there is no hassle of storing it. The heightened activity in gold ETFs is also driven by the prospects of an imminent further interest rate cut by the <keyword id="20078761" type="General" weightage="20" keywordseo="u-s-federal-reserve" source="keywords">U.S. Federal Reserve</keyword> in the coming months,” he added. “Investors with a short- to medium-term investment horizon may consider investment through gold ETFs. A buy-on-dips strategy here may help investors capitalise on a temporary correction in prices. Also, given the current market dynamics where equities are showing mixed trends, a modest, 5-10% allocation to gold may serve as a hedge against inflation and market volatility, which may help you balance risks in an optimum manner,” Kumar noted. <h2> Wait, there is no dearth of options</h2>But if ETFs make you go WTF, there’s always digital gold. You can invest in the yellow metal without actually physically holding it for as low as Rs 1. The best part? You can buy or sell this gold 24 X7 seamlessly via multiple apps without having to pay storage costs. On your behalf, your gold is stored in insured vaults by the seller. But remember, digital gold continues to remain unregulated territory in the country, where you venture at your own risk. In 2021, market watchdog SEBI had even asked its members to desist from selling digital gold. Then there are gold mutual funds and the Sarkari SGBs, or sovereign gold bonds. While gold mutual funds invest primarily in gold ETFs, SGBs are issued by the <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword> and are also a reliable substitute for holding physical gold. However, with the RBI currently putting brakes on issuing SGBs, investing in them is out of the question. Plus, you should only get your hands on SGBs if you're in for the long haul. Apart from a 2.5% p.a. interest, you don't have any yearly earnings from them. Moreover, no premature redemption is allowed before 5 years, and you'll have to wait a good 8 years to maximise your returns. <h2> Okay, tell me about returns</h2>In contrast, the seventeen gold ETF schemes currently present in the market offer an average one-year return of 29.12%. Stay with it a little longer, and you can end up with returns worth 16.93% and 13.59% over a 3 and 5-year period, respectively. If you look at it, these returns are comparable with the returns delivered by actual, physical gold. Data from Value Research indicates that gold, as a commodity, has delivered returns worth 27.24%, 16.53%, and 14.18% over a 1, 3, and 5-year period, respectively. So, worth investing, right? <h2>What are the risks?</h2>See, stock markets are as unpredictable as monsoons in Mumbai. One significant market correction can wash away your returns, and one sunny day or an upswing can leave you wallowing in wealth. Since your gold investments are directly linked to these markets, you should steel yourself up for some volatility. Plus, international gold prices are in dollars. So, if our rupee decides to take a nosedive, your returns might look a bit tarnished. Also, know that your ETF might not always perfectly mirror gold prices, which is also known as a tracking error. It's like expecting your Zomato-ordered food to look exactly like the picture on the menu—it's close, but not quite. Then there’s the taxation bit. The budget this year brought down the <keyword id="20552259" type="General" weightage="20" keywordseo="ltcg" source="keywords">LTCG</keyword> (long-term capital gains tax) on gold ETFs from the previous 20% to 12.5% (sans indexation). LTCG is what you pay if you sell your ETF units after 12 months. If you sell your gold ETF units within a year and make handsome returns, the tax you’ll have to pay will be equivalent to your income tax slab rate. <h2>Is gold just for old?</h2>A survey by fintech firm Moneyview thinks otherwise. Per their findings, over 85% of the 3,000 respondents it talked to considered gold to be a valuable asset for wealth preservation, with its intrinsic value and historical performance continuing to drive consumer confidence. Particularly, young investors in the age group of 25–40 years are also investing in gold via both physical and digital ways to build wealth for retirement and other long-term goals. So, young or old, everyone’s going for gold. So, this festive season, with gold prices going north, investing in gold can add that much-needed glitz to your financial attire. But remember, don't go overboard since gold isn't exactly a high-return-yielding asset. But whether you're a seasoned investor looking to diversify or a newbie trying to make their way in the markets, investing in gold offers you a glittering safety cushion. Just remember, while gold can make your portfolio shine, it's your smart investment decisions that truly make you golden. Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified, and registered advisors for professional and personalised financial advice.

Can investing in gold this festive season add the much-touted Midas touch to your investments?

<div type="image" title="Save yourself the trouble of buying physical gold this Diwali, and instead, go digital with Gold ETFs!" height="900" width="1200" msid="114507055" hostid="261" sizebytes="439216" caption="&amp;lt;p&amp;gt;Save yourself the trouble of buying physical gold this Diwali, and instead, go digital with Gold ETFs!&amp;lt;/p&amp;gt;"></div> Ah, <keyword id="18712" type="General" weightage="20" keywordseo="Gold" source="Orion">gold</keyword>! The shiny metal that's been making humans lose their minds since time immemorial. And yet, from <keyword id="23657519" type="General" weightage="20" keywordseo="king-midas" source="keywords">King Midas</keyword> to our neighbourhood aunty and even our moms (and secretly dads), everyone seems to have a super soft spot for the <keyword id="6384667" type="General" weightage="20" keywordseo="Bullion" source="Orion">bullion</keyword>. But here's the kicker: right now, gold prices are breaking all records on their upward trajectory! As of today, prices of 24k carat gold have passed the Rs 80,000 mark per 10 grams. And if experts are to be believed, this train isn't stopping anytime soon! So, as shiny as gold might look, adding even a bit of its glitter as we start decking up for the festive season might not be so easy on your pockets. But let's admit it—we love our gold and can't live without it. No wonder India is the second-largest consumer of the yellow metal in the world, only behind China. Such is our fondness for the metal that the <keyword id="20195223" type="General" weightage="20" keywordseo="world-gold-council" source="keywords">World Gold Council</keyword> had to up our 2024 annual demand forecast to 850 tonnes, up from the previously estimated 750 tonnes. However, our love for gold isn't just about looking fabulously embellished and blinding people with its bling. Indians also see gold as a long-term, trusty investment, supporting our other hard-earned assets, especially when high <keyword id="22195" type="General" weightage="20" keywordseo="Inflation" source="Orion">inflation</keyword> rates pull our returns down. After all, while inflationary pressures generally weaken the purchasing power of our regular paper money, gold is built differently. When the world is buckling to inflation, gold gains value during these times. This is also why it is considered a solid hedge against inflation. With <keyword id="188" type="General" weightage="20" keywordseo="Diwali" source="Orion">Diwali</keyword> and <keyword id="4067" type="General" weightage="20" keywordseo="Dhanteras" source="Orion">Dhanteras</keyword> knocking at our doors, the inflation demon continued to bother India like a guest who refused to leave. Just last month, the Consumer Price Index (CPI) stood at 5.49%, much higher than the anticipated levels. Moreover, the diverging policy stances among central bankers worldwide, growing geopolitical tensions, tough job markets, and extreme weather events are only adding to the uncertainty. In such economically uncertain times, what should your gold strategy be this festive season? To buy or not to buy, that is the question. Well, let’s get to it. <h2><keyword id="20050894" type="General" weightage="100" keywordseo="gold-etfs" source="keywords">Gold ETFs</keyword> to the rescue</h2>See, buying physical gold jewellery is certainly a flex, but also a financial fuss. First, you pay a heavy amount to buy gold. Not to mention all those extra, hefty jewellery-making charges. And then you pay even more money to keep it safe in a bank locker, lest it get stolen. But what if we tell you that you can own pure 24k gold, minus all these frills? Welcome, Gold ETFs (Exchange Traded Funds). Simply put, gold ETFs are like the cool cousins of your traditional gold investments. Instead of stashing gold bars under your mattress like those maniac millionaires we see in Bollywood films, you can now invest and trade in gold through the stock market. It's basically buying units of an <keyword id="19930506" type="General" weightage="20" keywordseo="etf" source="keywords">ETF</keyword> on the stock exchange that directly mirror the ongoing domestic prices of gold. Generally, gold ETFs are equivalent to 99.5% pure physical gold bars, and each ETF unit denotes actual, one gram of gold. And let's face it, who would not want that golden glow in their lives? Gold ETFs have witnessed an over seven-fold surge in their AUM (assets under management) in just the last five years. From Rs 5,613.22 crore in September 2019 to Rs 39,823.50 crore in September 2024, gold ETFs seem to be in-thing. Inflows in gold ETFs have shot up by a whopping 2,695% over the last 5 years. In September 2019, gold ETFs had garnered a mere Rs 44.11 crore. Compare that to the inflows worth Rs 1,232.99 crore gold ETFs received last month. Talk about growing, or glowing popularity! In fact, in just 2024, inflows in gold ETFs have surged by nearly 88% since the beginning of this calendar year. From Rs 657.46 crore in January 2024 to Rs 1,232.99 crore in September 2024, good old gold is never out of season. <h2>So, how do these ETFs work? Should I invest in them now?</h2>All you need is a Demat account. Log into your account, choose the gold ETF scheme you want to invest in, and voila! You’re now a bullion-aire! All your gold ETF units will be stored in this account. Then, you can buy and sell gold ETFs just like you buy shares—in real-time. So, if gold prices inch upwards, which is where gold is currently going, the value of your ETF units will also rise in lockstep. Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, says that of late, gold ETFs have been increasingly gaining popularity among investors due to the liquidity, safety and transparency they offer. "With the escalating global geopolitical tensions boosting the ‘safe-haven’ appeal of the bullion, investors are preferring to park their funds in gold ETFs as compared to investing in physical gold, as there is no hassle of storing it. The heightened activity in gold ETFs is also driven by the prospects of an imminent further interest rate cut by the <keyword id="20078761" type="General" weightage="20" keywordseo="u-s-federal-reserve" source="keywords">U.S. Federal Reserve</keyword> in the coming months,” he added. “Investors with a short- to medium-term investment horizon may consider investment through gold ETFs. A buy-on-dips strategy here may help investors capitalise on a temporary correction in prices. Also, given the current market dynamics where equities are showing mixed trends, a modest, 5-10% allocation to gold may serve as a hedge against inflation and market volatility, which may help you balance risks in an optimum manner,” Kumar noted. <h2>Wait, there is no dearth of options</h2>But if ETFs make you go WTF, there’s always digital gold. You can invest in the yellow metal without actually physically holding it for as low as Rs 1. The best part? You can buy or sell this gold 24 X7 seamlessly via multiple apps without having to pay storage costs. On your behalf, your gold is stored in insured vaults by the seller. But remember, digital gold continues to remain unregulated territory in the country, where you venture at your own risk. In 2021, market watchdog SEBI had even asked its members to desist from selling digital gold. Then there are gold mutual funds and the Sarkari SGBs, or sovereign gold bonds. While gold mutual funds invest primarily in gold ETFs, SGBs are issued by the RBI and are also a reliable substitute for holding physical gold. However, with the RBI currently putting brakes on issuing SGBs, investing in them is out of the question. Plus, you should only get your hands on SGBs if you're in for the long haul. Apart from a 2.5% p.a. interest, you don't have any yearly earnings from them. Moreover, no premature redemption is allowed before 5 years, and you'll have to wait a good 8 years to maximise your returns. <h2>Okay, tell me about returns</h2>In contrast, the seventeen gold ETF schemes currently present in the market offer an average one-year return of 29.12%. Stay with it a little longer, and you can end up with returns worth 16.93% and 13.59% over a 3- and 5-year period, respectively. If you look at it, these returns are comparable with the returns delivered by actual, physical gold. Data from Value Research indicates that gold, as a commodity, has delivered returns worth 27.24%, 16.53%, and 14.18% over a 1, 3, and 5-year period, respectively. So, worth investing, right? <h2>What are the risks?</h2>See, markets are as unpredictable as monsoons in Mumbai. One significant market correction can wash away your returns, and one sunny day or an upswing can leave you wallowing in wealth. Since your gold investments are directly linked to these markets, you should steel yourself up for some volatility. Plus, international gold prices are in dollars. So, if our rupee decides to take a nosedive, your returns might look a bit tarnished. Also, know that your ETF might not always perfectly mirror gold prices, which is also known as a tracking error. It's like expecting your Zomato-ordered food to look exactly like the picture on the menu—it's close, but not quite. Then there’s the taxation bit. The budget this year brought down the LTCG (long-term capital gains tax) on gold ETFs from the previous 20% to 12.5% (sans indexation). LTCG is what you pay if you sell your ETF units after 12 months. If you sell your gold ETF units within a year and make handsome returns, the tax you’ll have to pay will be equivalent to your income tax slab rate. <h2>Is gold just for old?</h2>A survey by fintech firm Moneyview thinks otherwise. Per their findings, over 85% of the 3,000 respondents it talked to considered gold to be a valuable asset for wealth preservation, with its intrinsic value and historical performance continuing to drive consumer confidence. Particularly, young investors in the age group of 25–40 years are also investing in gold via both physical and digital ways to build wealth for retirement and other long-term goals. So, young or old, everyone’s going for gold. So, this festive season, with gold prices going north, investing in gold can add that much-needed glitz to your financial attire. But remember, don't go overboard since gold isn't exactly a high-return-yielding asset. But whether you're a seasoned investor looking to diversify or a newbie trying to make their way in the markets, investing in gold offers you a glittering safety cushion. Just remember, while gold can make your portfolio shine, it's your smart investment decisions that truly make you golden. Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified, and registered advisors for professional and personalised financial advice.

Simply put: Can investing in gold this festive season add the much-touted Midas touch to your investments?

<ul class="summary-list"><li>Expect a re-acceleration of inflation for the rest of 2024 into 2025, says Michael Landsberg.</li><li>High shipping rates and daily living expenses indicate that inflation could be worse than expected.</li></ul>A few months ago, it seemed like the war on <a target="_blank" href="https://www.businessinsider.com/higher-long-term-inflation-outlook-investing-strategy-attractive-bonds-stocks-2024-10">inflation</a> had been won.Wall Street strategists were expecting inflation to continue cooling down into 2025, clearing the way for a series of consistent rate cuts as the Federal Reserve insisted price increases were no longer a threat. In September, the Consumer Price Index (CPI) showed that prices rose 2.4% from last year — closing in on the Federal Reserve's target of 2%.Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, wasn't so sure. He saw signs in the market pointing to a re-acceleration of inflation in the last few months of 2024 and into 2025.Now, it seems like Landsberg may be right. After a Trump victory, concerns about inflation are creeping up again as proposed policies such as <a target="_blank" href="https://www.businessinsider.com/trump-tariffs-hit-company-stock-profits-hardest-china-investing-manufacturing-2024-11">tariffs</a> could push prices up. And as the October CPI report showed, inflation is back on the rise, with prices increasing 2.6% year-over-year. In an interview with Business Insider, Landsberg shared the economic indicators he's watching to monitor inflation and the best way to prepare your portfolio in case of another flare up.<h2 id="7dc40d47-f3ee-4de6-bd68-d838e6c9299f">'Higher for longer'</h2>Inflation could rise to 3% as early as January and hit a mid-3% level in 2025, making it difficult for the Federal Reserve to continue its rate-cutting cycle, in Landsburg's view. He's expecting the Fed to pause rate cuts in December.Landsberg believes the Bureau of Labor Statistics' metrics aren't providing the full inflation picture. He's keeping his eye out on other economic indicators that provide a more on-the-ground look at inflation levels.First, rising Chinese shipping rates are a telling sign of inflation. China is one of the US' biggest trading partners, so an increase in transportation costs between the two countries will likely trickle down and reflect in consumer prices.Geopolitical conflicts in the Red Sea are contributing to the price increases, as shipping companies are forced to detour and choose longer and more expensive routes, according to Landsberg.With <a target="_blank" href="https://www.businessinsider.com/inflation-fed-rate-cuts-red-sea-attacks-panama-canal-shipping-2024-1">12% of global trade</a> passing through the Suez Canal, the Red Sea region is a critical trade route for consumer basics such as oil, cars, raw materials, and electronic components. As a result, these blockades are putting pressure on global supply chains and shipping costs.<div type="image" title="Shanghai Containerized Freight Index" height="663" width="1185" msid="115308890" hostid="261" sizebytes="33696"></div>The Shanghai Containerized Freight Index, which tracks the current spot freight rates for containerized cargo departing from Shanghai, China, has remained elevated in 2024 after spiking earlier this year due to the continued blockade of the Red Sea by Houthi rebels."Shipping costs don't affect margins of companies as much as they're going to affect people's wallets, and that's not getting looked at," Landsberg said.Landsberg also points to the high prices of commodities and everyday necessities. Food prices and rents are still rising. In some East Coast metro areas, rents have risen over double digits since last year, according to <a target="_blank" class="" href="https://www.redfin.com/news/rental-tracker-october-2024/">Redfin</a>.Insurance prices are another strong indicator of inflation, whether it be for cars or <a target="_blank" href="https://www.businessinsider.com/states-most-at-risk-climate-change-rising-home-insurance-premiums-2024-10">homes</a>."Inflation in insurance, which everyone has to have all the time, is up double digits year-over-year," Landsberg said. "That affects people's wallets certainly more than just a printed CPI number."That's not to mention the potential of wage inflation. According to October's employment report, hourly wage growth was up 4% from this time last year. If Trump clamps down on immigration, then that number could go even higher as the supply of workers falls, pushing up the cost of labor.<h2 id="102f3015-2817-4d7e-8b5c-6ea2e030d247">Rebalance your portfolio</h2>Diversification is key in an inflationary environment by spreading out risk between sectors and asset classes, but you might be less diversified that you think, according to Landsberg.One mistake that Landsberg sees investors making is doubling down too much on a specific investment theme. Investors bullish on AI may have devised creative ways to play the AI trade outside of the technology sector, such as buying data center real estate investment trusts and utility stocks. This can give them a false sense of security in their portfolio, as it seems like they're exposed to multiple different sectors.However, if all of your investments across sectors are based on the AI theme, you won't experience much derisking.Landsberg points to the market selloff in August this year, where utilities and real estate indices fared better than technology, but individual real estate and utilities stocks with significant exposure to data centers didn't perform so well."I tell people now that we need to be diversified on themes, not just on sectors," Landsberg said. Some other secular growth themes that Landsberg believes will drive stocks include an aging population, cybersecurity, and alternative energy.In addition to making sure you're sufficiently diversified, there are some other steps that you can take to protect your portfolio from inflation. Landsberg identified a few inflation-benefitting trades such as energy, financials, and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-in-gold-price-record-highs-safe-haven-2024-10">gold</a>.Some funds that provide exposure to these sectors include the Energy Select Sector SPDR Fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/the-energy-select-sector-spdr-fund-us81369y5069?miRedirects=1">XLE</a>), the iShares US Financials ETF (<a target="_blank" href="https://markets.businessinsider.com/etfs/ishares-us-financials-etf-us4642877884?miRedirects=1">IYF</a>), and the Goldman Sachs Physical Gold ETF (<a target="_blank" href="https://markets.businessinsider.com/etfs/goldman-sachs-physical-gold-etf-us38150k1034?miRedirects=1">AAAU</a>)As the end of the year draws near, Landsberg recommends taking a look at your portfolio and rebalancing some positions. If you're overexposed to technology and AI, now is a good time to put money in more inflation-resistant areas.Ultimately, make sure you're investing in high-quality companies with a robust financial profile, he said."You need to have a portion of your portfolio that will do well if inflation starts to move back higher," Landsberg said. "You want companies with pricing power, companies with earnings growth."

Here's how to rebalance your portfolio as these economic indicators flash 'higher for longer' inflation and rates

<ul class="summary-list"><li>Donald Trump won a second term in Tuesday's presidential election.</li><li>Analysts expect Trump's economic policies to increase inflation, and push interest rates higher.</li></ul><a target="_blank" class="" href="https://www.businessinsider.com/donald-trump-wins-presidential-election-race-2024-11">Donald Trump's victory</a> is set to herald a new era of higher inflation, tighter monetary policy, and surging cryptocurrencies, analysts said in initial reactions to the presidential election result. The economic impact of Trump's second term is likely to be volatile, said Lindsay James, investment strategist at UK-based Quilter Investments."While he, and others that surround him such as <a target="_blank" class="" href="https://www.businessinsider.com/trump-won-election-what-that-means-for-elon-musk-2024-11">Elon Musk</a>, want to cut the size of the state, public spending is likely to remain very high and taxes kept low," she added."Many of his measures will be inflationary and likely to lead to a rise in bond yields, putting pressure on the Federal Reserve in its quest to bring interest rates down."The <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">Federal Reserve cut rates</a> for the first time in four years in September, and is <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-federal-reserve-election-jerome-powell-inflation-jobs-2024-11">expected to cut again at its November meeting on Thursday</a>. However, such cuts could be shortlived if Trump's trade policies, which <a target="_blank" class="" href="https://www.businessinsider.com/trump-tariff-plan-inflation-policy-impact-trade-war-china-rates-2024-5">include proposed near-universal tariffs</a>, prove to be inflationary as expected.Thomas Matthews of consultancy Capital Economics wrote: "We suspect that the more important story for the bond market is just the inflationary effect of Trump's policies, including the tax cuts but also the tariffs and immigration reductions, all of which would be likely to result in a higher path for the federal funds rate." Analysts at Dutch lender Rabobank shared that view, suggesting that the Fed could raise rates early next year."On the assumption that Trump will move to increase some tariffs relatively quickly, it is Rabobank's view that the Fed's easing cycle could be over early next year as policymakers react to the inflationary implications of tariffs," they wrote.This should keep the US dollar strong through 2025, while concerns about the potential impact of his policies could subdue the euro, Rabobank's analysts added."While it will take time before the markets have the information needed to develop a strong narrative on the impact of Trump's agenda on the international economy, the domestic inflationary impact of his policy does suggest a stronger dollar through 2025."<h2 id="bab2b493-925a-4648-b862-b9cf71553b4a">Bitcoin could hit $100,000</h2>One asset that analysts expect to surge in the wake of Trump's victory is bitcoin, which <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/trump-trade-us-presidential-election-dollar-treasuries-stocks-crypto-djt-2024-11">rallied sharply early on Wednesday morning.</a>"Bitcoin is the one asset that was always going to soar if Trump returned to the White House," wrote Russ Mould, investment director at online trading platform AJ Bell.The victory has "fired up traders to speculate when, not if, it will <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-prediction-100k-btc-selloff-forecast-anthony-scaramucci-2024-7">smash through $100,000</a>," he added."Trump has already declared his love of the digital currency and crypto traders now have a new narrative by which to get even more excited about where the price could go."

Volatility, higher rates, and surging bitcoin. Here's what analysts are saying about Trump's victory.

<ul class="summary-list"><li>The Mortgage Bankers Association's refinancing index jumped 20.3% last week to its highest in two years.</li><li>That comes as the 30-year fixed mortgage rate dipped 2 basis points to 6.13% last week.</li></ul>Mortgage rates are falling as the Fed starts its long-awaited easing process, and homeowners are finally taking advantage.The Mortgage Bankers Association's refinancing index soared 20.3% last week to its highest level since April 2022, according to data released Wednesday. That follows a large increase from the prior week, too.The surge in refinancing activity comes as mortgage rates fall as the market prices in expected easing from the Federal Reserve.Last week, the 30-year fixed mortgage rate dipped 2 basis points to 6.13%, marking eight weekly declines in a row, according to the MBA.The rate is showing downward progress on an annual basis, too. The 30-year fixed mortgage rate saw its first annual decline in three years last month, <a target="_blank" href="https://www.businessinsider.com/mortgage-rates-30-year-refinance-applications-real-estate-housing-market-2024-8">falling to 6.5%</a> from 7.07% the year prior, according to data from <a target="_blank" class="" href="https://fred.stlouisfed.org/graph/?g=1bnGA">Freddie Mac</a>.Those rate dips are likely a result of expected easing from the Fed.Mortgage rates began falling weeks ahead of the central bank's September meeting, where the market expected a 100% chance of easing. At the close of its meeting last week, the Fed opted to cut interest rates by a <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9?utm_medium=ingest&amp;utm_source=markets&amp;_gl=1*hgnax2*_ga*MTY3OTgyNjg0MS4xNzIxMDE2MDM2*_ga_E21CV80ZCZ*MTcyNzM2NDEyNC4xOTEuMC4xNzI3MzY0MTI1LjU5LjAuMA..">jumbo 50 basis points</a>.While the Fed funds rate doesn't directly impact mortgage rates, debt-financing costs do trend in the same direction, albeit on a lagged basis.Traders expect the Fed to continue easing in the next year with a series of additional cuts totaling roughly 200 basis points by the end of 2025, according to CME's <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">FedWatch tool</a>.But since the market has already priced in Fed easing, rates likely won't drop much more, a Redfin economist said in a <a target="_blank" href="https://www.redfin.com/news/income-needed-to-afford-home-drops-2024/">report</a> earlier this week.Joel Kan, MBA's Vice President and Deputy Chief Economist, said that while the current level of refinancing isn't close to reaching all-time highs, refinances are making up most of mortgage applications."As a result of lower rates, week-over-week gains for both conventional and government refinance applications increased sharply," Kan said. "While the level of refinance activity is still modest compared to prior refi waves, they now account for the majority of applications, given the seasonal slowdown in purchase activity."That likely also reflects <a target="_blank" href="https://www.businessinsider.com/mortgage-rates-nar-real-estate-agent-buyers-home-prices-redfin-2024-8">reluctance from would-be homebuyers</a>. Even as home affordability appears to improve, with home affordability posting its first annual decline since June 2020, prices remain historically high. And homebuyers are likely waiting to see if mortgage rates drop even more.

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