The price of gold reached a new all-time high today. At the same time, it came even closer to 2,500 dollars per troy ounce.
The price of gold hit a record high of $2,482.42 per troy ounce on Wednesday morning. It later fell below $2,470, but was still 6.5 percent higher than a month earlier and a fifth higher than at the start of the year.
In recent days, investors' expectations about the Fed's policy have been a strong impetus for the growth of the price of the precious metal. The market is already confident that the Federal Reserve will cut interest rates in September, and believes the cuts could be bigger than previously expected. Hopes of monetary easing in the US could still be a boost for precious metals.
"The growth of the gold value is supported by both the macroeconomic environment and the high geopolitical tension in the world. Gold's rally is largely driven by demand for safe-haven assets in the market. Tensions in the Middle East, the war in Ukraine and numerous smaller conflicts, as well as rising tensions between China and Europe and the United States, also contribute to the growth of gold prices. In addition, rising ocean freight rates are impacting the market. "Parts of the market believe that Donald Trump's growing popularity in the race for the White House could also boost gold prices, which have long been considered a safe haven in tough times," says eToro analyst Pawel Majtkowski.
The demand for the metal in the market is determined by both central banks (in 2022 and 2023, who purchased a total of 1,000 tons of gold per year), as well as jewelry buyers and retail investors, among whom the Chinese and Indians stand out.
"Fundamentals have clearly changed enough to give investors more reason to shift the weight of gold in their portfolios." As a result, price-sensitive funds started buying. Broad positioning and sentiment that is still far from extreme fever levels means the $2,500/oz level could be tested soon,” said Chris Weston, head of analysis at Pepperstone Group.
However, many predictions are still quite conservative. The median of forecasts compiled by Bloomberg shows that an ounce of the precious metal is expected to cost $2,372 by the end of the year. The most bullish forecast (by Bank of America analysts) is $2,750 per troy ounce, while the most bearish forecast (by Australian government analysts) is $2,015 per troy ounce.
"Gold does not generate a fixed rate of return like bonds or stock dividends, but it ensures diversification of the investment portfolio. However, in the past, gold has generally provided lower returns than the stock market, which may be the reason why individual investors are reluctant to invest in gold," eToro analyst Pawel Majtkowski reminds us.
