Gold Prices are Breaking Records! Reasons Behind the Rise

Historic Peak in Gold Prices

Recently, gold prices reached a record high of ${$}4,243. This increase is fueled by investors turning to safe-haven assets. The US-China trade tensions and the possibility of a US government shutdown have boosted demand for gold. Spot gold pulled back slightly during the day to ${$}4,241, while US gold futures rose by 1.4% to ${$}4,261.

Trade Tensions and the Search for Safe Havens

WisdomTree commodity strategist Nitesh Shah stated, "Renewed trade frictions are creating uncertainties in the global supply chain, which is increasingly directing investors towards gold." Additionally, Shah noted that there is a high probability of gold remaining above the ${$}4,200 level.

Unusual Relationship Between Stocks and Gold

As a general trend in the markets, during periods when risky assets are desired, the traditional safe asset gold typically sees a decrease, while currently, both asset classes are moving upwards together. Since October 2022, gold prices have gained over 60%, showcasing a remarkable increase.

Investor Concerns and Inflation Protection

Some investors express a preference for buying gold to protect against speculative movements in the stock market. Historically, gold has been seen as a safe haven during periods of inflation. However, inflation expectations are still showing a stable trend. The impact of high tariffs appears to be directing investors towards gold purchases.

The Impact of Digital Assets

The Global Investment Committee believes that the rise in gold prices is linked to central banks reducing their dependence on the US dollar and the influence of digital assets on currency markets. The potential of digital assets to convert fiat money could affect the future of the gold market.