Spot gold prices just reached a historic new record, crossing the $4,000 per ounce threshold for the first time. This backlog surge means an amazing 52% increase since the start of the year. Spot gold was last quoted at $4,002.53 an ounce, up 0.5% on the day as of 0213 GMT. U.S. gold futures for December delivery were up 0.5% as well, trading at $4,025 per ounce.
There are a few, complicated yet interconnected reasons propelling this increase. These are among the political fortunes wrought by massive and growing debt levels, a weaker U.S. dollar and growing demand, exacerbated by civil disorder in France and now Japan. Smart investors are quickly realizing the importance of diversifying their reserves into gold as a hedge against any and all economic uncertainties.
In 2024 year-to-date, spot gold is up 27%, an impressive measure of sustained investor demand. Compounding matters is the ongoing U.S. government shutdown. Besides sowing doubts about the political and economic stability, it greatly increases demand for gold, making the price per ounce skyrocket.
Tai Wong, an independent metals trader, summarized the prevailing sentiment in the market.
“There’s so much faith in this trade right now that the market will look for the next big round number, which is 5,000 with the Fed likely to continue to lower rates,” – Tai Wong.
Investor expectations about the future course of Federal Reserve policy are proving to be a critical factor. Now market participants expect a possible rate cut at the next Fed meeting later this month. This optimism is pushing up gold prices. Analysts expect one more 25-basis-point cut in December, making gold that much more attractive to investors.
Investor demand for gold continues to be robust Giovanni Staunovo, market analyst.
“What we see now is that investors are buying gold, despite the price being high, and this is amplifying the move further,” – Giovanni Staunovo.
We are bullish on gold in the medium term. Experts caution that some bumps can be expected over the course. Any possible settlement to long-standing disputes in the Mideast or Ukraine might reduce demand and lower prices. The main reasons for gold’s rise continue to be in effect. Debt levels, currency strength, and geopolitical instability are not going to shift positively in the near term.