Gold prices have surged past $2,400 this year, marking a significant increase that has surprised many observers. While historically gold reacts to lower real interest rates or a weak dollar, neither of which have been the case recently, there are powerful drivers behind the rapid rise in gold prices.
One such driver is central bank purchases from emerging markets like Turkey and China. Additionally, Chinese retail investors are turning to gold as a safe investment option amidst the real estate crisis and weak stock market performance in China. The traditional role of gold as a “crisis currency” has become more apparent in the current geopolitical landscape, with tensions rising globally.
Some experts believe that the current environment has shifted the paradigm for gold as an investment instrument. Factors such as central banks’ zero and negative interest rate policies, high national debt levels, and geopolitical uncertainties have all contributed to the rise in gold prices. While opinions are divided on whether further increases will occur, many experts see potential for continued growth due to these drivers.
The price of silver has also seen a significant increase due to its correlation with gold prices. However, silver’s industrial applications cause it to fluctuate more than gold. Despite this volatility, experts predict that both metals will continue to see positive growth in the future due to their safe-haven status and demand from emerging markets like China.
