Like any commodity, gold prices tend to fluctuate. But lately, in an inflationary environment, they’ve been going up and this week hit a record high of $2,135.39 an ounce. That breaks through the previous high that was set more than three years ago.
Gold prices have been climbing over recent weeks as traders advance the belief that the Federal Reserve will soon change its policy from raising interest rates to cutting them. That has sent the value of the dollar lower, and since gold can be valued in dollars – as well as other currencies – the price of gold has benefitted.
But something else may also be lifting the precious metal. Analysts point out that governments and central banks have begun buying more gold. Concerns over wars in Ukraine and Gaza and the U.S. presidential election in 11 months could all be contributors.
Gold prices have rallied since October, gaining around 14%. Many analysts suggest prices could go even higher if evidence begins to emerge at upcoming Fed meetings that policymakers are growing more dovish and prospects of rate cuts begin to improve.
What’s the outlook?
Heng Koon How, head of markets strategy, global economics and markets research at UOB estimates gold prices could rise to the $2,200 an ounce level by the end of next year.
“The anticipated retreat in both the USD (U.S. Dollar) and interest rates across 2024 are key positive drivers for gold,” Koon told CNBC.
The last time gold was on a bull run like this was 2011, as the world was coming out of the Great Recession. Before that, during the hyperinflation of the late 1970s and early 80s, gold rose to $850 an ounce, which is still the high when adjusted for inflation.
Gold, which can be purchased in physical form as well as in stock exchange-traded funds (ETF), isn’t the only dollar alternative doing well in late 2023. Bitcoin has also rallied.
Trading at $25,220 in mid-September, the digital currency this week rose to nearly $42,000.
Photo Credit: Consumer Affairs News Department Images
Posted: 2023-12-05 11:56:41