NEW YORK – The demand for gold continues to soar as the precious metal hit another all-time high this week. Experts attribute this surge to ongoing economic uncertainty, geopolitical tensions, and strong demand from central banks around the world.
As we look ahead to the coming months, analysts have a bullish outlook on the price of gold. However, as we all know, the future is never promised. So, it is important to understand the current state of the gold market and what factors are driving its price.
As of Tuesday, the New York spot price of gold closed at just over $2,657 per Troy ounce. This is the highest recorded price to date, according to FactSet. To put it into perspective, a gold bar or brick weighing 400 Troy ounces would be worth more than $1.06 million today.
Over the past year, the price of gold has climbed hundreds of dollars per Troy ounce. In fact, Tuesday’s price is up nearly $145 from a month ago and over $740 from this time last year. This means that the price of gold has increased by almost 30% year-to-date, outpacing the benchmark S&P 500’s 20% gain since the start of 2020.
So, why is the price of gold going up?
There are a few key factors driving the recent surge in gold prices. One of them is the uncertainty in the global economy. When people are uncertain about the future, they tend to turn to gold as a safe haven for their money. This was evident in the early days of the COVID-19 pandemic, where gold prices saw a significant increase.
Geopolitical tensions are also playing a role in the rise of gold prices. Recent events, such as Israel’s strikes in Lebanon and ongoing wars in Gaza and Ukraine, have fueled fears about the future worldwide.
In the United States, there is also concern about the health of the job market. The Federal Reserve’s recent half-point cut and potential future rate cuts suggest a focus on slowing employment numbers. With a tumultuous election year ahead, economic policy could also be impacted, adding to the uncertainty.
In addition to these factors, central banks around the world are showing strong demand for gold. According to Joe Cavatoni, senior market strategist at the World Gold Council, central bank demand is well above the five-year average. This reflects their “heightened concern with inflation and economic stability.”
Furthermore, recent stimulus measures in China aimed at boosting consumer spending are expected to increase retail investments in gold, further driving up its price.
But is investing in gold worth it?
Advocates of investing in gold consider it a safe haven and a way to diversify and balance their investment portfolio. It can also potentially mitigate risks in the future. Some people find comfort in owning a tangible asset that has the potential to increase in value over time.
However, experts caution against putting all your money into one investment. It is important to have a diversified portfolio and to not be influenced by the “FOMO effect” or fear of missing out. As FxPro senior market analyst Michel Saliby explains, investors should not risk all their money just because they see others making gains. It is crucial to have a clear risk management strategy in place for any investment.
Saliby also predicts that if geopolitical tensions cool down, the price of gold may correct slightly, falling around $50 to $80. However, he remains bullish overall and expects the spot price of gold to surpass the previously predicted $2,700 mark for 2025 and potentially reach $2,800 or $2,900 in the near future.
Despite the positive outlook, it is important to note that future gains are never guaranteed, and not everyone agrees that gold is a good investment. Critics argue that gold is not always an effective hedge against inflation and that there are more efficient ways to protect against potential loss of capital.
The Commodity Futures Trade Commission has also warned people to be cautious when investing in gold. Precious metals can be highly volatile, and prices can rise as demand increases. This means that when economic anxiety is high, the ones who typically profit from precious metals are the sellers.
If you do choose to invest in gold, it is essential to educate yourself on safe trading practices and be wary of potential scams and counterfeits on the market.
In conclusion, the rush for gold shows no signs of slowing down. With ongoing uncertainty in the global economy and strong demand from central
