The price of gold has reached a historic high, exceeding $4,000 (£2,974) per ounce. This increase is attributed to investor concerns regarding global economic and political instability, leading many to seek safe-haven investments. The price of gold has surged more than 25% since April, coinciding with announcements of tariffs by U.S. President Donald Trump that have impacted global trade.
Economic indicators have also been delayed due to the ongoing U.S. government shutdown, which is another contributing factor to the rising gold prices. The spot gold price hit the $4,000 mark on a Wednesday morning in Asia, while gold futures reached the same figure on October 7. Analysts suggest that the uncertainty from the government shutdown, such as past shutdowns where gold benefitted, is currently a “tailwind for gold prices.”
Retail and institutional investors are increasingly purchasing gold as a protective measure against economic unpredictability. Notably, retail investment has seen a rise, with customers at Silver Bullion reportedly doubling over the past year. Many investors are opting for long-term storage of their gold, indicating a trend towards viewing it as a secure asset.
Experts warn that gold prices could decline if the U.S. government shutdown ends sooner than anticipated or if economic conditions stabilize. Historical precedents show that gold’s value can fluctuate significantly, with a notable drop occurring in 2022 when prices fell from $2,000 to $1,600 per ounce due to interest rate hikes by the Federal Reserve in response to inflation.
Current expectations suggest that a potential lowering of interest rates could further enhance gold’s appeal. However, any resurgence in inflation that prompts the Federal Reserve to increase rates may pose risks to the ongoing rally in gold prices.
Source: https://www.bbc.com/news/articles/c8ex3wgjlexo?at_medium=RSS&at_campaign=rss