Why are gold prices hitting record highs?

The worth of gold climbed to an all-period high on Friday as uncertainty about dispute in the Middle East and the U.S. presidential election sent investors in search of a secure haven.

The latest jump is hardly a blip. Gold has soared about 32% since the outset of 2024, outpacing the 23% growth in the S&P 500 and a 28% surge in the tech-heavy Nasdaq over that same period.

The monthslong stretch of powerful act owes in large part to an expectation of lower yield rates at the Federal savings, which typically coincide with an boost in gold prices, some analysts told ABC information.

They also pointed to purchases of gold reserves among central banks, as well as persistent demand from investors aiming to diversify their financing collection and insure against global unrest.

Some analysts cautioned that gold prices often oscillate on a weekly or monthly basis, making it challenging for investors to period the economy.

“Gold is at a recent record high, but you can rest assured that once it hits its peak it will probably back off of it,” Jim Wyckoff, elder economy analyst at Kitco Metals, told ABC information. “Nobody knows when.”

The surge in worth has stemmed largely from immense appetite for gold among central banks in recent years, especially from the central lender in China, experts said.

Central banks worldwide purchased more than 1,000 tons of gold during each of the last two years, the globe Gold Council found. Before those years, that threshold had never been crossed.

China ranks atop the list of nations seeking to bolster their gold reserves as a means of reducing its dependence on the U.S. dollar. Until May, the People’s lender of China had purchased gold for 18 consecutive months.

“U.S.-China relations have been strained for quite a while, and it’s been even worse over the history year. It’s a reasonable thing for them to reduce their reliance on the dollar,” Campbell Harvey, a professor at Duke’s Fuqua School of Business who studies merchandise prices, told ABC information.

“That means you require an alternative and one alternative that’s credible is gold,” Harvey added.

However, central lender purchases of gold slowed in the middle of this year, the globe Gold Council said in July. The Chinese central lender has paused its purchases of gold over the history five months.

Still, the gold worth continued to soar in recent months as investors grew increasingly confident that the Fed would cut yield rates. Heightened geopolitical uncertainty over that period also made gold an attractive place for secure-haven pool, some experts said.

Last month, the Fed cut yield rates for the first period in more than four years. The chances of an additional quarter-point rate cut next month stand at more than 90%, according to the CME FedWatch Tool, a assess of economy sentiment.

Lower yield rates typically coincide with higher gold prices, Trevor Yates, an analyst at pool firm Global X, told ABC information.

“It’s telling what has been behind this rally,” Yates added.

Some experts also attributed the rise in gold prices to geopolitical uncertainty and unease surrounding the coming U.S. presidential election. A perception of global instability often induces investors to purchase gold as means of safeguarding their funds in a millennia-ancient property viewed as immune to major swings in global economic act, they added.

“There’s no powerful consensus among the economy or the community about which candidate is going to triumph the election,” Wyckoff said. “That causes uncertainty, and uncertainty usually triggers secure-haven demand for gold.”