According to FactSet, the spot price of gold closed above $2,514, the highest closing price recorded for the commodity to date, according to AP News.
The spot price of gold closed at just over $2,514 per Troy ounce on Tuesday. Troy ounce is the standard of measurement for precious metals, which is equivalent to 31 grams.
The gold price has risen hundreds of dollars per Troy ounce over the past year. Tuesday’s price was up nearly $620 from the same point in 2023.
Interest in buying gold often arises during periods of uncertainty, such as potential concerns about inflation and the strength of the US dollar. This causes people to look for alternative places to deposit their money. Previously, gold experienced sharp rises in the early days of the COVID-19 pandemic.
Giovanni Staunovo, a commodity analyst at UBS Global Wealth Management, stated that the main drivers of gold’s recent gains were the weakening US dollar and expectations that the Federal Reserve would cut its benchmark interest rate next month.
Another factor is strong demand from central banks, now far above the five-year average, according to Joe Cavatoni, senior market strategist at the World Gold Council. He also pointed to ongoing geopolitical tensions, among other factors that led some people to buy more gold.
Worthy investment
The wars in Ukraine and Gaza have particularly heightened uncertainty across the globe. Many countries, including the United States, are also experiencing a tumultuous election year that could prove decisive for future economic policy.
Staunovo’s team at UBS predicts the gold price will reach $2,600 by the end of this year and $2,700 by mid-2025. UBS expects lower US interest rates and a weaker dollar to fuel inflows into gold ETFs or exchange-traded funds.
However, critics argue that gold is not necessarily the hedge against inflation. There are better ways to protect oneself against potential capital loss, for example derivative-based investments, they add.
The Commodity Futures Trade Commission had also warned people to be wary of investing in gold. The commission said precious metals could be very volatile, with prices rising in response to increased demand. This means that “when economic anxiety or instability is high, the people who typically profit from precious metals are the sellers.”
It is also important to be aware of potential fraudsters and counterfeits on the market.
