NEW YORK (AP) \u2014 A\u00a0gold rush\u00a0is here. The precious metal hit an all time high this week.<\/p>\n\n\n\n
The spot price for gold closed Tuesday above $2,514, according to data from FactSet. That\u2019s the highest closing price recorded for the commodity to date. Here\u2019s what you need to know.<\/p>\n\n\n\n
The spot price of gold closed Tuesday at just over $2,514 per Troy ounce \u2014 the standard for measuring precious metals, which is\u00a0equivalent\u00a0to 31 grams. That would make a gold bar or brick weighing 400 Troy ounces worth more than $1 million today.<\/p>\n\n\n\n
This week\u2019s record high means that the price of gold has climbed hundreds of dollars per Troy ounce over the last year. Tuesday\u2019s price is up nearly $620 from this time in 2023.<\/p>\n\n\n\n
There are a few factors behind the recent gains.<\/p>\n\n\n\n
Interest in buying gold\u00a0often comes at times of uncertainty \u2014 with potential concerns around inflation and the strength of the U.S. dollar, for example, causing some to look for alternative places to park their money. Gold also\u00a0saw a surge\u00a0in the early days of the COVID-19 pandemic.<\/p>\n\n\n\n
Giovanni Staunovo, a commodity analyst at UBS Global Wealth Management, said the main drivers of recent gold gains have been the weaker U.S. dollar and\u00a0expectations that the Federal Reserve\u00a0will cut its benchmark interest rate next month. With\u00a0particular concern\u00a0focused on the\u00a0health of the job market, all eyes will be on a Friday speech from Fed Chair Jerome Powell in Jackson Hole, Wyoming.<\/p>\n\n\n\n
Another factor is strong demand from central banks \u2014 which is currently well-above the five year average, notes Joe Cavatoni, senior market strategist at the World Gold Council. Cavatoni says this \u201creflects heightened concern with inflation and economic stability.\u201d He also pointed to ongoing geopolitical tensions, among other factors, that have\u00a0caused some to buy more gold\u00a0recently.<\/p>\n\n\n\n
The wars in\u00a0Ukraine\u00a0and\u00a0Gaza\u00a0have notably fueled uncertainty around the world. And numerous countries, including the United States, are also in the midst of a\u00a0tumultuous election year\u00a0\u2014 which could prove crucial to future economic policy.<\/p>\n\n\n\n
Advocates of\u00a0investing in gold\u00a0call it a \u201csafe haven,\u201d arguing the commodity can serve to diversify and balance your investment portfolio, as well as mitigate possible risks down the road. Some also take comfort in buying something tangible that has the potential to increase in value over time.<\/p>\n\n\n\n
Staunovo\u2019s team at UBS forecasts the price of gold will reach $2,600 by this year\u2019s end \u2014 and $2,700 by mid-2025. UBS sees lower U.S. interest rates and the weaker dollar supporting inflows into gold ETFs, or\u00a0exchange traded funds, consequently boosting investment demand.<\/p>\n\n\n\n
Still, future gains are\u00a0never promised\u00a0and not everyone agrees gold is a good investment. Critics say gold\u00a0isn\u2019t always\u00a0the inflation hedge many say it is \u2014 and that there are more efficient ways to protect against potential loss of capital, such as through derivative-based investments.<\/p>\n\n\n\n
The Commodity Futures Trade Commission has\u00a0also previously warned\u00a0people to be wary of investing in gold. Precious metals can be highly volatile, the commission said, and prices rise as demand goes up \u2014 meaning \u201cwhen economic anxiety or instability is high, the people who typically profit from precious metals are the sellers.\u201d<\/p>\n\n\n\n
If you do choose to invest in gold, the commission adds, it\u2019s important to educate yourself on safe trading practices and be cautious of potential scams and counterfeits on the market.<\/p>\n","protected":false},"excerpt":{"rendered":"
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