NEW YORK (AP) — Demand for gold continues to rise.
Gold hit another record high this week, with recent gains for the precious metal largely attributed to ongoing economic uncertainty, geopolitical tensions and strong demand from central banks around the world.
If trends continue, analysts have an optimistic view of gold prices in the coming months. But the future is never promised. Here’s what you need to know.
What is the price of gold 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 equals 31 grams — its highest ever, according to FactSet. That would make a 400-troy ounce gold bar or brick worth more than $1.06 million today.
This week’s record high means gold prices have risen by hundreds of dollars per troy ounce over the past year. Tuesday’s price is nearly $145 higher than a month ago and more than $740 higher than this time in 2023.
Analysts note that gold prices have risen nearly 30% so far this year, outpacing the benchmark S&P 500’s roughly 20% gain since the start of 2024.
Why is the gold price rising?
There are a number of factors that explain the recent gains.
Interest in buying gold often comes during times of uncertainty — with potential concerns about inflation and the strength of the U.S. dollar, for example, leading some to look for alternative places to park their money. Gold also rose in the early days of the COVID-19 pandemic.
Sources of uncertainty today include geopolitical tensions, which escalated in recent days with Israel’s deadly attacks in Lebanon. And ongoing wars in Gaza and Ukraine continue to stoke global fears about the future.
In markets like the US, there is also particular concern about the health of the labour market. The Federal Reserve’s larger-than-usual half-point cut last week signals a renewed focus on slowing the employment rate, and more rate cuts are expected before the end of the year. And such measures come in the midst of a tumultuous election year — which could also prove crucial for economic policy going forward.
In the near future, people are considering “any eventual turbulence in the economy,” explained FxPro senior market analyst Michel Saliby. “That’s why they keep a fair amount of gold in their portfolio as a ‘safe haven.’”
Analysts are also pointing 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 its five-year average — reflecting “heightened concerns about inflation and economic stability.”
According to Saliby, recent stimulus measures in China aimed at boosting consumer spending are also expected to lead to increased retail investment, further boosting gold’s performance.
Is Gold Worth the Investment?
Proponents of investing in gold call it a “safe haven,” arguing that the commodity can serve to diversify and balance your investment portfolio and reduce potential risks in the future. Some also find it comforting to buy something tangible that can increase in value over time.
Experts warn against putting all your eggs in one basket.
Both retail and institutional investors shouldn’t be swayed by the “FOMO effect,” or fear of missing out, Saliby notes — explaining that people shouldn’t risk all their money just because they see others making a profit. He advises investors to keep an eye on the market and always have a clear risk management strategy for their position.
If geopolitical tensions cool, Saliby expects gold prices to correct slightly, perhaps around $50 to $80. But he remains generally optimistic about the near term – he expects gold spot prices to soon exceed the $2,700 previously forecast for 2025, and perhaps reach $2,800 or $2,900 if trends continue.
Still, future profits are never promised, and not everyone agrees that gold is a good investment. Critics say that gold is not always the inflation hedge that many claim it is — and that there are more effective ways to protect against potential capital loss, such as through derivatives-based investments.
The Commodity Futures Trade Commission has previously warned people to be cautious about investing in gold. Precious metals can be highly volatile, the commission said, and prices rise as demand increases — meaning that “when economic fear or instability is high, the people who typically benefit from precious metals are the sellers.”
If you decide to invest in gold, the commission says it is important to educate yourself about safe trading practices and be wary of potential scams and counterfeit products on the market.
