The price of gold hits a new high driven by geopolitical tensions.

This implies a 76% increase over the last 5 years and a 12% increase since the beginning of 2024.

Ignacio Teson•Friday, April 5, 2024•1 min read

Gold starting to shine again after the FED

The price of gold, one of the safe-haven assets in times of uncertainty, reached a new all-time high this Friday, surpassing $2,325 per ounce.

One of the safe-haven assets in times of uncertainty, gold, reached a new all-time high this Friday, surpassing $2,325 per ounce, driven by growing geopolitical tensions and central bank purchases.

The precious metal touched $2,325.16 per ounce after experiencing a 1.5% increase from Thursday’s close, according to Bloomberg data.

Gold prices have seen three consecutive weeks of gains.

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Analysts commonly cite geopolitical risks, especially in the Middle East, and central bank purchases as the main reasons for this sharp increase.

The escalation of geopolitical tensions, central banks’ purchases of physical gold, and potential interest rate cuts are fueling its recent surge. Central bank purchases appear to have become the dominant driver of bullish sentiment in the gold market.

Apart from central banks, the situation in China stands out, where retail investors are also showing interest in gold.

This implies a 76% increase over the last 5 years and a 10% increase since the beginning of 2024. Central banks buying gold in large quantities is an important factor.

Recent data from the World Gold Council (WGC) shows that monetary authorities have recorded 14 consecutive years of net acquisitions of gold, increasing their holdings to over 36,700 metric tons valued at $2.52 trillion.

The last two years have been particularly notable, with purchases totaling 1,000 metric tons each year, surpassing all previous records and reaching levels unseen since 1967.

Major central banks’ purchases have played a significant role in driving the rally in gold prices, contributing to demand on an enormous scale, albeit not considered structural.

Monetary authorities now hold 17% of all gold in circulation, second only to the amount historically used for jewelry and ornaments (45%) and bullion and coins (22%).

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ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.