POSTED IN: Economy and Gold, Gold and Geopolitical Issues, Gold and Inflation, Gold and Interest Rates, Gold as an Inflation Hedge, Gold for Diversification, Gold Price Forecasts, home_featured2, Price of Gold
As of April 9th, 2024, gold prices have climbed to an all-time high over $2,350/ounce. While there are many reasons the price of gold might increase, the prevailing sentiment is that it is being caused by the market’s optimism towards the Federal Reserve cutting rates (although we’ll cover more reasons later). As inflation tames and the economy appears robust, the odds of a rate decrease increase, which trends to make gold a more attractive investment.
note: This article was originally written in March 2024 and updated to reflect recent increases in gold prices.
Gold last hit a record high in mid-2020 after COVID started its spread, moving just above the $2,000/ounce mark temporarily. This time, gold has hovered near record highs for weeks, showing strength as it has now broken higher to rates never seen before, even in the cash for gold craze of the early 2000s.
That craze topped out in 2011 at over $1800/ounce, then took nearly 10 years to recapture that all-time high, which it finally did in 2020. Since then, gold volatility has decreased, with the price stabilizing between $1700 and $2000 for the past several years. That is, until the recent jump to records in March of 2024.
source: goldprice.org
If you’ve been waiting to sell your gold, or if you have some old gold jewelry sitting at home collecting dust, now may be a good time to cash in on it. Take advantage of high prices and buy something you enjoy, pay down debt, or invest in something that historically has higher returns (like the stock market).
Curious what your gold is worth? Request a free mailer now and see how much we’d pay for your gold!
Want to learn more about what affects the price of gold? Read on!
Economic Uncertainties
One of the driving forces behind gold’s ascent to record highs is the prevailing economic uncertainties and challenges facing global markets. From high interest rates to inflationary pressures and geopolitical tensions, investors are seeking safe-haven assets to preserve wealth and mitigate risk. Gold, with its intrinsic value and time-tested reputation as a store of wealth, has always been a preferred choice for many investors during times of uncertainty.
Inflationary Pressures
Inflation continues to loom large in today’s economic landscape, fueled by massive COVID-era monetary stimuli and other measures. As central banks grapple with rising inflationary pressures, investors are turning to gold as a hedge against currency devaluation and purchasing power erosion. Gold’s status as a tangible asset with limited supply underscores its appeal as an inflation-resistant store of value, attracting investors seeking to safeguard their portfolios against the erosive effects of inflation.
Interest Rates
Given the previous statements about inflationary pressures, you may expect inflation coming under control causing a drop in gold prices. However, interest rates are another major factor that influence rates. Lowering interest rates encourages growth and actually increases inflation (or in the case of 2024, will hopefully decrease high inflation more slowly), so the prospect of lowering rates is a positive indicator for gold prices, apparently outweighing the inflation risks.
Geopolitical Turmoil
Heightened geopolitical tensions and geopolitical uncertainties are also driving demand for gold as a safe-haven asset. From trade disputes to geopolitical conflicts (e.g. Russia/Ukraine, Israel/Gaza, China/Taiwan), geopolitical developments have the potential to roil financial markets and undermine investor confidence. In such environments, gold is a haven of stability and security, offering refuge from the volatility and uncertainty of geopolitical events.
Diversification and Portfolio Protection
For more conservative investors seeking to build resilient and diversified portfolios, gold is a popular holding that can help offset risks associated with traditional financial assets. By including gold in their investment portfolios, investors can enhance diversification, reduce overall portfolio volatility, and (possibly) enhance long-term risk-adjusted returns.
Seizing the Opportunity
As gold hits record highs and captures headlines around the world, investors are presented with a unique opportunity to capitalize on it. Whether you’re a seasoned investor or new to the world of precious metals, now is a good time to consider what to do with your gold.
If you own physical gold, it’s easy to let it sit there if you don’t have an immediate need for the money. But that isn’t always the wisest decision. It’s important to make sure your money is working for you.
To see how much you could get for your gold, try our cash for gold calculator or request a free gold mailer to get a fast appraisal for your valuables.
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