The rush for gold just keeps coming.
Gold hit another all time high this week. Recent gains for the precious metal are largely credited to ongoing economic uncertainty, geopolitical tensions and strong demand from central banks around the world.
If trends continue, analysts have bullish outlooks on the price of gold for the months ahead. But the future is never promised. Here’s what you need to know.
Where does the price of gold stand today?
The New York spot price of gold closed Tuesday at just over $2,657 per Troy ounce — the standard for measuring precious metals, which is equivalent to 31 grams — the highest recorded to date, per FactSet. That would make a gold bar or brick weighing 400 Troy ounces worth more than $1.06 million today.
This week’s record high means that the price of gold has climbed hundreds of dollars per Troy ounce over the last year. Tuesday’s price is up nearly $145 from a month ago and more than $740 from this time in 2023.
The price of gold is up nearly 30% year to date, analysts note — outpacing the benchmark S&P 500’s roughly 20% gain since the start of 2024.
Why is the price of gold going up?
There are a few factors behind the recent gains.
Interest in buying gold often comes at times of uncertainty — with potential concerns around inflation and the strength of the U.S. dollar, for example, causing some to look for alternative places to park their money. Gold also surged in the early days of the COVID-19 pandemic.
Among sources of uncertainty today are geopolitical tensions — which escalated over recent days with Israel’s deadly strikes in Lebanon. And the ongoing wars in Gaza and Ukraine have continued to fuel fears about the future worldwide.
In markets like the U.S., there’s also particular concern about the health of the job market. Last week’s larger-than-usual half-point cut by the Federal Reserve signals a new focus on slowing employment numbers, and more rate cuts are expected before the end of the year. And such action arrives in the midst of a tumultuous election year — which could prove crucial to economic policy in the road ahead, too.
In the near future, people are considering “any case of turbulence in the economy,” FxPro senior market analyst Michel Saliby explained. “This is why they’re keeping a decent portion of gold in their portfolio as a ‘safe haven.’”
Analysts also point to strong demand from central banks around the world. Joe Cavatoni, senior market strategist at the World Gold Council, noted last month that central bank demand was well-above the five year average — reflecting “heightened concern with inflation and economic stability.”
Recent stimulus measures in China aimed at boosting consumer spending are also expected to up retail investments, Saliby added, further boosting gold’s performance.
Is gold worth the investment?
Advocates of investing in gold call it a “safe haven,” arguing the commodity can serve to diversify and balance your investment portfolio, as well as mitigate possible risks down the road. Some also take comfort in buying something tangible that has the potential to increase in value over time.
Experts caution against putting all your eggs in one basket.
Both retail and institutional investors shouldn’t be influenced by the “FOMO effect,” or fear of missing out, Saliby notes — explaining that people should not risk all their money just because they are seeing others rake in gains. He advises investors to watch the market and always have a clear risk management strategy for their position.
If geopolitical tensions cool, Saliby expects the price of gold to correct slightly, perhaps falling around $50 to $80. But he remains bullish overall for the near future — expecting gold’s spot price to soon surpass the $2,700 mark previously predicted for 2025, and perhaps reach as high as $2,800 or $2,900 if trends continue.
Still, future gains are never promised and not everyone agrees gold is a good investment. Critics say gold isn’t always the inflation hedge many say it is — and that there are more efficient ways to protect against potential loss of capital, such as through derivative-based investments.
The Commodity Futures Trade Commission has also previously warned people to be wary of investing in gold. Precious metals can be highly volatile, the commission said, and prices rise as demand goes up — meaning “when economic anxiety or instability is high, the people who typically profit from precious metals are the sellers.”
If you do choose to invest in gold, the commission adds, it’s important to educate yourself on safe trading practices and be cautious of potential scams and counterfeits on the market.
(AP)
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2 Responses
Great example of ignorant journalism that leaves the reader just as confused and uninformed as before.
Have you noticed that the price of ALL things has gone up by roughly 30% ? So what’s special about gold?
The reason is due to money printing/creation by central banks. When the supply of money increases, prices go up. You can see charts of the M2 money supply over time.
The big question is, why are central banks buying gold? (With the money that they created out of thin air btw.)
The reason is, fiat money is only valuable in the here and now. Since it can be created by central banks with next to no cost. The more they print, the less it buys.
It’s similar to a drug. At first, it is potent. The more it used abused and overused, the less effect each dosage provides.
Central banks understand this well, it’s their own game. So they print paper money and buy tangible assets. Gold is the apex asset. JP Morgan said “Gold is money. All else is credit.” Meaning a claim on something else. A dollar used to be a claim on silver/gold, until Nixon nixed America’s promise to pay. He said temporarily we suspend the convertibility of the dollar to gold. 53 years later, we are still waiting…so if you held 35 dollars back in 1971, you could buy an ounce of gold. Now it costs 2660 dollars for the same ounce, while we wait for the us to agree to redeem it at 35…not happening. So the only way from here is down.
The article talks about “gains” for gold. This is ignorant jargon. It’s price that’s going up, not value.
Go see Mike Maloney’s “hidden secrets of money” and take the logical step from there. Don’t expect to get educationed by superficial articles written by ignorant journalists.
there is a well-known stock timing rule, that by the time an asset reaches the lay media (such as YWN)people that wanted to buy it have already bought it, and it is usually a sell signal — probably the same here — anyone lucky enough to have bought gold a long while ago should sell it now and wait for a big correction down to buy again.