Why gold is breaking records – and where it could go next

Gold hit another all-time high this week. The precious metal’s recent gains are largely attributed to continued economic uncertainty, geopolitical tensions and strong demand from central banks around the world.

If the trends continue, analysts have a bullish outlook on the gold price for the coming months. But the future is never promised. Here’s what you need to know.

Where is the price of gold today?

Spot gold in New York ended Tuesday at just above $2,657 per troy ounce — the standard for measuring the precious metal, which is equivalent to 31 grams — the highest ever recorded on FactSet. That would make a gold bar or brick weighing 400 troy ounces worth more than $1.06 million today.

This week’s record high means the price of gold has climbed hundreds of dollars per troy ounce over the past year. Tuesday’s price is up nearly $145 from a month ago and more than $740 from this time in 2023.

The price of gold is up nearly 30% year to date, analysts note — outpacing the S&P 500’s roughly 20% gain since the start of 2024.

Why is the price of gold rising?

There are several factors behind the recent gains.

Interest in buying gold often comes at times of uncertainty – with potential concerns about inflation and the strength of the US dollar, for example, prompting some to look for alternative places to park their money. Gold also rose in the early days of the COVID-19 pandemic.

Among the sources of uncertainty today are geopolitical tensions – which have escalated in recent days with Israel’s deadly strikes in Lebanon. And the ongoing wars in Gaza and Ukraine continued to fuel fears about the future worldwide.

In markets like the US, there are also particular concerns about the health of the labor market. The Federal Reserve’s larger-than-usual half-point rate cut last week signals a renewed focus on slowing job growth, and more interest rate cuts are expected before the end of the year. And such action comes amid a tumultuous election year — one that could also prove crucial for economic policy down the road.

In the near future, people consider “any case of turbulence in the economy”, explained FxPro senior market analyst Michel Saliby. “That’s why they keep a decent chunk of gold in their portfolio as a ‘safe haven’.”

Analysts also point to strong demand from central banks around the world. Joe Cavatoni, senior market strategist at the World Gold Council, noted last month that central bank demand was well above its five-year average — reflecting “increased concerns about inflation and economic stability.”

China’s recent stimulus measures to boost consumer spending are also expected to boost retail investment, Saliby added, further boosting gold’s performance.

Is gold worth the investment?

Proponents of investing in gold call it a “safe haven,” arguing that the commodity can serve to diversify and balance your investment portfolio, as well as mitigate potential risks down the road. Some are also content to buy something tangible that has the potential to increase in value over time.

Experts warn against putting all your eggs in one basket.

Both retail and institutional investors shouldn’t be swayed by the “FOMO effect” or fear of missing out, Saliby notes — explaining that people shouldn’t risk all their money just because they see others making gains . He advises investors to watch the market and always have a clear risk management strategy for their position.

If geopolitical tensions cool, Saliby expects the price of gold to correct slightly, possibly falling to around $50 to $80. But overall, he remains bullish for the near future – the spot gold price is expected to soon break the $2,700 mark previously predicted for 2025, and may reach as high as $2,800 or $2,900 if trends continue.

However, future earnings are never promised and not everyone agrees that gold is a good investment. Critics say gold isn’t always the hedge against inflation that many say it is — and that there are more effective ways to protect against potential capital loss, such as through derivative investments.

The Commodity Futures Trading Commission has also previously warned people to be wary of investing in gold. Precious metals can be extremely volatile, the commission said, and prices rise as demand increases — meaning “when economic anxiety or instability is high, the people who typically profit from precious metals are the sellers.”

If you choose to invest in gold, the commission adds, it’s important to educate yourself about safe trading practices and be aware of potential scams and counterfeits in the market.