On Friday, gold prices reached an all-time high, surpassing $2,600 per ounce as global investors continue to seek safe-haven assets amidst global uncertainties and geopolitical tensions. Spot gold prices increased by 1.13% to a record high of $2,609.8 per ounce before experiencing some profit-taking. For the week, gold prices were up roughly 4%, while year-to-date gains reached 23%, outpacing the 13% increase recorded for all of last year.
The recent surge in gold prices can be attributed to reports that the US Federal Reserve may lower interest rates by 50 basis points next week, bringing the current range of 5.25% to 5.50%, which is the highest level since 2001. Lower borrowing costs make non-yielding gold more attractive as an investment.
According to analysts, the rally in gold prices is primarily driven by investor demand for safe-haven assets in light of growing global uncertainty and increased geopolitical tensions in the Middle East and Eastern Europe. Historically, investors have sought refuge in gold during periods of economic instability, stock market crises, military conflicts, and pandemics due to its status as a reliable store of value.
The price of gold has also been supported by the US dollar’s weakening position. The greenback has dropped to its lowest level this year against a basket of peer currencies ahead of the anticipated interest rate cuts by the Federal Reserve. Bank of America predicted earlier this month that gold prices could reach $3,000 per ounce within the next 12-18 months.
Other precious metals experienced gains on Friday as well. Platinum rose by 2.36% to above $1,000 per ounce, while silver increased by 3.3% to over $31. The continued rise in the prices of these metals can be attributed to their status as safe-haven assets and their potential for further appreciation amid global uncertainties and economic instability.