Unlike equities, price of gold didn’t take a breather yesterday (S&P GCSI Gold hit an all-time high); gold’s 31% YTD performance is impressive, but not even on podium among S&P GSCI single commodity index YTD total returns
@SPDJIndices pic.twitter.com/I5d5022me5— Liz Ann Sonders (@LizAnnSonders) October 22, 2024
Gold prices have hit record highs as investors seek a safe haven amid growing concerns about the upcoming U.S. presidential election and global economic instability. The precious metal has rallied for five consecutive days, with spot gold prices soaring above $2,700 an ounce and reaching a new record high of over $2,733 an ounce on Monday. Year-to-date, spot gold is up more than 30%.
Gold continues to climb. It's reached another all-time high today, that's almost 40 peaks this year – this chart tracks #gold's performance through 2024 so far. pic.twitter.com/5Q9PgSoWTm
— World Gold Council (@GOLDCOUNCIL) October 22, 2024
Analysts attribute the surge in gold prices to various factors, including macroeconomic uncertainties, mounting geopolitical tensions, and a desire to hedge against inflation. The U.S. dollar has also strengthened, reaching multi-month highs, while U.S. Treasury yields have risen once more, contributing to the volatile market sentiment. Michael Widmer, head of metals research at Bank of America, believes that gold has further room to grow.
“If gold doesn’t rally now, then I’m not sure when it ever will. Actually, I think the fundamental backdrop looks quite good,” he said. Widmer is among several analysts who expect gold to reach $3,000 an ounce by 2025.
China has recently announced aggressive stimuli that may see a rise in #gold demand in China. Find out more in Research Head, Ray Jia's latest blog here: https://t.co/BNI2ZcWnyk pic.twitter.com/DaQfKvuzW0
— World Gold Council (@GOLDCOUNCIL) October 22, 2024
As the price hits yet another record high today, here are some thoughts on why the West should pay much greater attention to what is behind the yellow metal's breathtaking performance this year.https://t.co/eRjXVbuheY#economy #markets #investing #investors @FT #gold pic.twitter.com/FWOrdDjwzM
— Mohamed A. El-Erian (@elerianm) October 21, 2024
Gold’s allure strengthens amidst uncertainty
Todd Jablonski, Principal Asset Management’s global head of multi-asset and quantitative investments, is also bullish on gold. For the first time in his 25 years of managing other people’s money, he is overweight on the precious metal.
Jablonski cites the steady increase in demand for gold, including purchases by central banks, as a reason for his optimism. However, John Reade, senior markets strategist at the World Gold Council, cautioned about potential short-term volatility in the gold market. He advised investors to maintain a position in gold as part of a diversified portfolio, with a recommended allocation between 4% and 10%.
The rising gold prices have also led to increased storage requirements in key financial hubs like Singapore. A heavily fortified storage facility near Changi Airport, which hosts dozens of private vaults and thousands of safe deposit boxes, epitomizes this phenomenon, catering to the world’s wealthy and cautious investors. As conflicts escalate and financial markets wobble, the allure of gold as a stable investment has strengthened.
The broader economic implications of a high gold price include low investor confidence in traditional financial markets and governmental stability, as well as increased mining and trading activities that can further affect global economic balances.
