Gold prices have surged to record levels, exceeding $2,525 per ounce as of Tuesday, driven by robust demand from central banks and exchange-traded funds (ETFs). This significant rise reflects a growing trend among investors seeking safe-haven assets amid global instability. Spot gold's increase comes alongside December futures, which have also crossed the $2,560 mark, marking gold as one of the best-performing metals in 2024.
The surge in gold prices can be attributed mainly to unprecedented central bank purchasing, with record levels reported in the first quarter of the year. Solita Marcelli, the chief investment officer for the Americas at UBS Global Wealth Management, anticipates that gold prices could reach $2,600 per ounce by the end of 2024, bolstered by ongoing demand from central banks and active investment funds. Since the start of 2024, gold futures have appreciated over 23%, making it a standout asset amidst geopolitical tensions that have led investors to seek safer investment options.
In addition to central bank activity, gold-backed ETFs have experienced positive inflows for three consecutive months, with North America showing stronger performance than Europe and Asia last July, according to a report by the World Gold Council. The upcoming speech by US Federal Reserve Chairman Jerome Powell at the Jackson Hole Economic Symposium is expected to be a pivotal moment for the gold market, as investors look for indications that may signal an interest rate cut next September.
- The rising gold prices are not just a reflection of current economic conditions, but also a broader trend of increasing interest in precious metals as a hedge against inflation and market volatility. Investors are becoming more aware of the benefits of diversifying their portfolios with assets like gold, which historically retains value during economic downturns.
- The World Gold Council's report highlights the importance of ETFs in the gold market, showing that these investment vehicles have gained popularity as they provide a more accessible way for investors to gain exposure to gold without the need for physical storage. As more investors turn to these funds, the demand for gold is likely to continue its upward trajectory.
