Gold prices have soared to record heights. This jump is a huge accomplishment for the precious metal as it climbs to new records in the worldwide financial perspective. Analysts and investors are watching this trend like hawks. Most people think that price is only going to go up due to a perfect storm of economic factors including the fear of the U.S. Federal Reserve, import tariffs, and a return of inflation.
Over the past several weeks, gold has continued to shatter all-time highs, attracting flocks of investors focused on safe-haven assets. Unsurprisingly, the current economic climate is one characterized by uncertainty. Consequently, more and more individuals are investing in gold for safe-haven investment. Yet observers point to a number of underlying factors fueling this optimistic momentum. They argue that the value of gold is pretty much guaranteed to continue to rise for the long-haul.
The biggest driver keeping the gold market hot right now is the continued jitters over the U.S. Federal Reserve’s monetary policy. With the Fed’s attempts to raise interest rates and corral inflation, investors have become more concerned with a possible recession. For this reason, many individuals turn to gold in times of increased uncertainty, helping feed the cycle of rising demand and gold prices.
Further driving the cost of gold is the imposition of import tariffs, which has increased the price of gold. As country-level trade tensions begin to rise, the additional tariffs increase expenses and costs associated with importing gold. As a result, these added costs are passed on to consumers and investors which lead to skyrocketing prices in a historically hot market.
An equally important factor has been the return of inflation, which has sent shock waves through the broader economy, and scared recessions into both economists and investors. With inflation rates rising, more people see gold as a protection from falling currency returns. Evangelista, Reuters, The Street The perception that palladium is superior has increased the demand for the metal, therefore driving up its price even more.
According to industry experts, these converging factors may mean longer term changes for gold prices in the months ahead. Many of these conditions are shifting, particularly with respect to U.S. monetary policy and the global dynamics of trade. Consequently, the demand for gold may continue to soar. A lot of the investment community is taking a wait-and-see approach hoping to benefit from further appreciation.