Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Gold prices hit records this week stretching over $2,589/oz. That marks more than a 26% gain in 2024 alone, and quarter four hasn’t even started. This most recent jump puts gold’s performance far ahead of the broader stock market which has receded as of late following respectable gains. If you’re having déjà vu, that’s because gold has set a score of all-time highs over the past few months, indicating impressive bullish momentum. In fact, gold’s previous peak level was achieved earlier last week. Investors can’t seem to look away from the charts before the yellow metal tops off its previous gains.
Bullish Fundamentals
Many factors influence gold prices, but a handful disproportionately affect its momentum. Currently, there’s a perfect storm of economic instability and geopolitical turmoil driving gold prices up.
- Quantitative Easing: Cooling inflation and an upcoming election are ushering in a period of quantitative easing. The Federal Reserve has voiced its intention to cut interest rates soon, the only question is how aggressively. Regardless, these dollar-snubbing rate cuts are a boon to gold as investors search for more stable assets.
- Global Wars: Raging wars spanning two continents have been dominating headlines, creating an atmosphere of fear and uncertainty in markets. Investors are looking for ways to shield their wealth, and safe-haven assets such as gold are benefiting from that risk aversion.
- Dollar Demise: The dollar’s status as the world reserve currency is being undermined from various angles. Misguided domestic fiscal policies have kickstarted a global process of de-dollarization as countries untether from USD. As countries shed their dollar reserves, Americans are turning to tangible assets to protect against currency devaluation.
- Central Bank Demand: This foundational shift from USD to gold has driven up central bank demand to record highs. Governments, especially of emerging economies, have binged on the yellow metal for years, setting new records in 2022, 2023, and the first half of 2024.
Unfortunately, none of the deteriorating economic or geopolitical factors driving up gold prices are getting better. Political instability on the homefront has become the norm, and economic mismanagement has become the status quo. As US influence abroad wanes, the global order is further shaken up.
Is the rally over?
Whenever an asset notches consistent highs, investors rightfully grow more cautious. Given gold’s confident rally, some bears are counting the yellow metal out. However, the broad consensus among banking elites and Wall Street is that gold is moving higher. This strong rally is one of the reasons experts point to higher evaluations in the future, not a reason to call for a cool-off. Many people are actually raising their gold price predictions on the back of this surge.
Where are gold prices headed?
Although the general forecast is that gold is moving higher, experts haven’t been shy about putting up concrete predictions. Here’s a quick rundown of some gold price forecasts from leading names:
- Morgan Stanley: $2,600 in Q4 of 2024.
- UBS: $2,800 in the next two years.
- Citibank: $3,000 by 2025.
- Bank of America: $3,000 by 2025.
Gold Shines Beyond Wealth Growth
Gold’s impressive surge can overshadow its many other investment merits, tempting investors to focus solely on its price growth. However, the primary purpose is to keep pace with inflation, preserving wealth and purchasing power during times of economic uncertainty. As inflation erodes the value of fiat currencies, gold offers a tangible store of value. Furthermore, physical gold offers a unique layer of privacy that other investments cannot match, giving investors a discreet way to safeguard their wealth. This combination of wealth protection, privacy, and potential for growth underscores why gold continues to be a cornerstone of diversified investment strategies.