Gold prices hit record high of $4,000 per ounce
What's the story
Gold prices have hit a record high of $4,000 per ounce in the international market. The surge comes as investors look for a safe haven amid geopolitical instability, economic uncertainty, and persistent inflation. The latest spike in gold prices follows the US Federal Reserve's decision to cut interest rates in September. This has made short-term debt instruments less appealing to investors.
Market trends
Central banks and retail investors are buying gold
Central banks and retail investors are buying gold at an unprecedented rate. Countries like China are moving away from US Treasurys and investing in gold, especially after the US imposed strict sanctions on Russia over its invasion of Ukraine. Retail investors are also flocking to this precious metal as a hedge against inflation.
Price surge
Gold futures close at record high
Gold futures closed at a record $4,004.4 per ounce, after hitting an intraday all-time high of $4,014.6. The price of gold has increased by some 50% this year as the US dollar index has fallen by 10%. This comes amid President Donald Trump's disruption of the global trade system and threats to the independence of the Federal Reserve. Peter Schiff, Chief Economist and Global Strategist at Europac believes gold prices will continue to rise significantly.
Market influence
Bull run in gold prices driven by central banks
The bull run in gold prices that began in 2022 is largely driven by central banks. According to the World Gold Council, after a pause in July, these institutions resumed buying in August, adding a net 15 tons to global reserves. The recent surge in gold prices is also fueled by the US government shutdown, which has pushed investors toward this safe-haven asset amid fears of an extended shutdown.