The price of gold has not found a ceiling. Bullion is selling on financial markets at $2,521 per ounce (2,276 euros), a new all-time high. The reasons for the rise are diverse, but experts point to strong demand from central banks and its acquisition as a safe haven asset, as protection by investors in the face of increasing geopolitical uncertainty. The price of the precious metal has risen by 10% since June and by 33% in the last 12 months. These strong increases in its valuation have made gold one of the commodities that has appreciated the most during 2024.
The rise in gold bullion began in 2022, when it was trading at just $1,650 per ounce. Charlotte Peuron, a manager at Crédit Mutuel AM, points to several causes in a report. “Over the past two years, there has been sustained demand for jewellery, there has been increasing interest in physical gold from Asian investors and there has been strong buying by central banks in emerging countries, especially the National Bank of China.” At current prices, each gold bar that the United States hoards in the bunker at Fort Knox (Kentucky) – weighing 400 ounces (11.34 kilograms) – would have a market value of more than one million dollars (just over 900,000 euros). There are 368,000 bars stored there.
Traditionally, gold has always been considered an ideal asset to stand out from the performance of other financial assets, such as stocks or bonds. When there is a sharp fall in the stock market, many investors turn to precious metals to protect themselves. This time, that has not been the case. The strong revaluation of gold has gone hand in hand with that of equities, with many stock markets reaching historic highs.
The latest rally is also explained by expectations that the United States will start lowering rates next month. This week, Federal Reserve Chairman Jerome Powell will offer clues on the outlook for monetary policy at the Jackson Hole symposium. Wayne Gordon, commodity strategist at Swiss bank UBS, believes that “trends point to the price per ounce exceeding $2,700 by mid-2025.”
When government bonds pay high yields, as they do now, many investors buy them, as they are a very safe asset. As yields decline, they become less attractive and some look to assets such as gold as an alternative. However, in recent years gold prices have risen even in an environment of high fixed-income interest rates, due to the boost in demand in emerging countries.
Ole Hansen, head of commodity strategy at Saxo Bank, points to another factor: “The recent rally has also seen a key factor: momentum [inercia, en jerga financiera]”That is, the fact that gold has become a fashionable asset and has reached historic highs is what ends up attracting new investors, causing its price to rise again.
The price at which gold is traded on international markets – $2,521 per ounce – corresponds to financial contracts for exchange between institutional investors and is not exactly the same as the price for sale to the public. However, the pattern is very similar, being somewhat lower in the latter case due to the costs associated with transporting and storing physical gold, as well as the existence of more intermediaries. In Spain, gold buying shops on the street are proliferating again, and in the United States you can even buy small ingots on the website of the Wall Mart hypermarket chain.
Fund manager Hernán Cortes, founding partner of Olea Gestión, has been betting on investing in the golden metal for years, as a way of providing stability to the portfolio. “It seems reasonable to think that in the coming years demand from central banks and financial investors will continue, giving at least strong support to current prices and, if use in jewelry does not decline, a moderate boost to prices.” For Cortés, the shine of gold is still far from fading.
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