Gold tops record high of $2,100 per ounce. Here is the reason for the sky high.


Gold prices hit record highs, topping $2,100 an ounce on Monday, as investors increased their holdings of the shiny metal amid a hedge against global conflicts and expected rate cuts by the Federal Reserve.

The recent rise in gold prices is “wild,” although it follows two years of solid gains in gold prices, Peter Boockvar, chief investment officer at Bleakley Financial Group, noted in a report. (Adjusted for inflation, gold reached its peak in 1980, when the price of $850 would translate to $3,200 in today’s dollars, he noted.)

See Manage your money for more on gold prices:

According to Reuters, the spot price of gold touched as high as $2,111.39 in overseas trading on Monday. It fell to $2,071 later in the session, up 14% for the year. By comparison, the S&P 500 has risen 21% over the same period.

Why gold is rising

Investors are snapping up gold because it is seen as an inflation hedge and a safe haven in times of political instability, whose concerns have been sparked by Russia’s war in Ukraine and the Israel-Hamas conflict. Non-US investors, particularly people in China, India, Indonesia and Saudi Arabia, are also more likely to buy physical gold as part of their financial diversification, noted Louis Gave of Gavekal research.

Investors in Western nations are largely prompted to buy gold by “financial crises, collapsing currencies, wars and geopolitical disputes,” he noted.

“The bottom line is that as gold breaks out to the upside, there appear to be many potential marginal buyers set up to keep chasing the price higher,” Gave told investors in a research note. “Meanwhile, it’s not obvious where the marginal seller is coming from. This seems like a great set-up for a bull market — this and the fact that absolutely nobody seems to care.”

At the same time, gold prices are rising on expectations that the Federal Reserve may start cutting interest rates in 2024. That could lead to a weaker US dollar, making gold more attractive as an investment, experts note. The prospect of lower borrowing costs next year has also driven stocks and bitcoin prices higher in recent weeks, with investors more willing to put their money into risky assets.

It’s not just individual investors who are buying gold to diversify their portfolios — central banks around the globe are also stocking up, according to Boockvar.

“According to the World Gold Council, in Q3 central banks bought 337 tonnes, almost double Q2 and the third highest quarter ever,” he wrote. “The acceleration in purchases was certainly partly triggered by the US and EU confiscation of about half of Russia’s central bank reserves.”

Will gold prices continue to rise?

Economists and Wall Street analysts predict that gold could move even higher, mainly due to the forecast that the Fed will start cutting interest rates next year. If the central bank lowers interest rates by 1 percentage point during the second half of 2024, prices for meta; could hit a new high of $2,300 an ounce in 2025,” according to JPMorgan analysts.

Meanwhile, even Costco is getting into the gold business and selling 1-ounce bars to its members, often selling out within hours. But for people looking to sell their gold to lock in today’s record prices, the effort may be somewhat more difficult, experts note.

There is online buyers that will pay close to the spot price for gold while providing insurance to protect your assets, such as The Alloy Market and Express Gold Cash, experts told CBS MoneyWatch.


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