As the historic surge continues past expectations, Gold prices have reached an all-time high, confirming its lofty place as a safe haven for investors in an exceptional period of economic turbulence. And financial experts, examining trend lines and a myriad of market influences, suggest that gold is far from done climbing the investment mountain.
Driving the Price Surge
During unsettled economic periods, gold has always been a safe port in the storm, a known quantity investors flock to when other investment options reveal their potential for loss. The current price surge is in large part attributed to the global economic recession caused by the COVID-19 pandemic. Disruption to economies is practically universal, with even the most resilient markets feeling the pinch.
Many countries have resorted to economic stimulus plans that risk igniting inflation when markets finally regain their traction. With the possibility of significant inflation in the future, gold becomes an even more appealing investment. It appreciates in value as currencies depreciate and its worth isn’t subjected to the whims of governmental monetary policy.
Increasing Geopolitical Tensions
Aside from the ongoing global health crisis, mounting geopolitical tensions also contribute to the gold price surge. Discord between superpowers often creates uncertainty in global economy, another factor pushing investors towards gold. The ongoing trade confrontations between the United States and China, for instance, amplify anxiety in the financial sector and increase the appeal of bullion’s stability.
The Rise of Gold ETFs
Another significant pillar on which this gold price surge sits is the growing accessibility and appeal of gold Exchange Traded Funds (ETFs). For many retail investors, holding physical gold is not an enticing proposition due to storage and insurance issues. Gold ETFs, however, enable investors to get a piece of the gold market without physically holding the precious metal. This democratization of gold trading has stoked demand, specifically from investors eager for an investment vehicle that holds its value amidst market storms.
The Dire State of Global Interest Rates
Finally, the continuing downturn in global interest rates has its own impact on gold prices. With rates at historic lows, bond yields are also poor, making these traditional investments less attractive. Investors then turn to alternatives with better potential returns, and with its historical solidity, gold is an obvious option.
Experts Predict Continued Rise
Analysts across the global market landscape have yet to call ‘peak gold’. While that golden ceiling is bound to eventually appear, observers suggest it is not imminent. The ongoing pandemic continues to pump uncertainty into markets worldwide, national debts are ballooning, and the forecast remains stormy in key market areas, including the US and China. Experts predict these factors could drive gold towards fresh highs, even possibly breaking the $2,000 per ounce barrier in the near future.
All this points to a continued climb for gold, certifying that today’s historic levels may only represent a waypoint for the precious metal, not a peak. As the world navigates through the pandemic, this rise seems to signal a larger shift towards gold as a reliable store of value in uncertain times.
