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The price of gold has surpassed the $3,000 per ounce mark, a milestone that marks a new era for the precious metal, seen as a safe haven amid geopolitical and economic uncertainties

The price of gold recently reached a new all-time high, surpassing $3,000 per ounce, a value that reflects the growing interest of investors in this safe haven asset at a time of global instability. Several economic and geopolitical factors are fuelling this trend, pushing gold to an increasingly central place in investors’ portfolios.

The causes of the rising gold price

According to Nicolas Cracco, CEO of Gold Avenue, the rise in the price of gold is the result of a number of economic and financial factors, including:

  • Global economic uncertainties: trade wars and rising inflation are driving investors to seek safe assets such as gold;
  • Expansionary monetary policies: central banks, including the Federal Reserve and the ECB, are considering interest rate cuts, making gold an even more attractive investment;
  • Growing demand for physical gold: there has been a sharp increase in gold purchases by both institutional and private investors. Despite the record high prices, only 10% of the orders relate to repurchases, while 88% are new purchases, a sign that investors are optimistic about a further increase in prices.

Confinvest also confirms the prominent role of gold as a safe haven asset. The value of gold has seen a weekly growth of 2.9% and a gain of 13.5% since the beginning of the year. Demand is growing, fuelled by geopolitical tensions and fluctuating financial markets.

The situation in the US and the effects on the trade balance

In the US, inventories in Comex warehouses have reached record levels, surpassing even those of the Covid-19 crisis. Current stocks stand at 39.7 million ounces, with a total value exceeding USD 115 billion, with a significant impact on the US trade balance, which has a record deficit of USD 131.4 billion.

Future Prospects for Gold

Analysts agree that gold will continue to rise in the coming months, with forecasts seeing the precious metal reaching $3,200-3,500 by year-end, if geopolitical and economic instability persists. Key factors to monitor include:

  • Geopolitical tensions: Relations between the US, Europe and emerging powers will continue to influence gold demand;
  • Central bank monetary policies: A further lowering of interest rates could stimulate new investments in gold;
  • Growing demand for gold: With increasing institutional and retail investment, gold continues to be seen as a strategic long-term asset.

In summary, if economic volatility and expansionary monetary policies continue, gold’s bullish trend looks set to continue.

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