A global gold rush has seen prices soar to a record high of $2,500 an ounce with further rises to come.
This means that a single standard-size gold bullion bar of about 400 troy ounces now sells for more than $1 million.
Investors, both private individuals and institutions, are turning to precious metals to preserve and boost their wealth amid global economic uncertainty.
Gold prices have risen about 20 percent this year and there are suggestions the figure could reach $2,600 by the end of this year.
People are turning to gold at a time when returns on other investments are predicted to fall as central banks around the world cut interest rates.
Anita Wright, Independent Financial Adviser at Bolton James, said: “The recent surge in gold prices, reaching a new all-time high, is driven by several factors, notably the U.S. Federal Reserve’s expected monetary policy changes.
“The market anticipates a September rate cut, possibly exceeding 0.25 percent, which is typically bullish for gold.
“Additionally, central banks, particularly in BRICS countries like Russia, China, India, and Turkey, have dramatically increased their gold purchases, reflecting growing mistrust in the U.S. dollar.”
She told Newspage: “The combination of lower interest rates, a weaker dollar, and strong central bank demand creates a highly favourable environment for gold and it is plausible that gold could rise further.”
Ole Hansen, the head of commodity strategy at Denmark’s Saxo Bank, said the gold price has been on an “uninterrupted rally” from a low of $1,810 an ounce in October.
A fall in US interest rates typically drives investment into gold, which is internationally denominated in the dollar.
Other than monetary policy, heightened geopolitical risks are also boosting the appeal of gold, which is seen as offering a safe haven.
Risks include the wars in Ukraine, the Middle East, and the November US presidential election.
Mr Hansen said the US presidential election is a cause for concern because both candidates are “prepared to spend money they haven’t got, thereby lifting the US debt levels further”.
In China, consumers are also snapping up gold to preserve value amid a depressed economic environment, an epic property crisis, and a weak currency.
Mr Hansen said: “Continued central bank demand amid geopolitical uncertainty and de-dollarisation, and not least gold’s ability to offer a level of security and stability that other assets may not provide” would give support to the yellow metal.
Analysts at UBS, the Swiss investment bank, said that prices could reach $2,600 an ounce by the end of 2024.
RBC Capital, the investment bank, had already raised its price forecast by $405 to $2,480 for the end of this year and by $460 to $2,600 by the middle of next year, anticipating that gold will remain above $2,000 an ounce until at least 2028.
The Chinese central bank has been aggressively building its physical gold position over the past two years in an attempt to diversify its reserves funds, adding more fuel to the rally. “That’s an important driver of gold, just because of the sheer size of the buying programme,” Price said.
The People’s Bank of China was the world’s largest single buyer of gold in 2023, with net purchases of 7.23 million ounces, the most by China for at least 46 years, according to the World Gold Council.
