Why is the price of gold so high this year?

Gold has always been a sought out investment. But in recent months, his price reached Near record highs. In April, spot gold prices touched $2,048 an ounce, approaching the record high of $2,067 set in August 2020. Since prices have cooled, they are still near $2,000 and Experts predict That may remain the case for some time.

Why has the popularity of gold increased? Below, we explore the contributing factors, as well as what they can tell you about the value of this particular investment.

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Why is the price of gold so high this year?

Several factors are responsible for this year’s meteoric rise in gold prices. They are connected:

Demand and supply

Gold is a limited commodity. There’s a lot of it to dig into, and once we’ve dug it all out, there’s nothing left to do. As a result, the demand for gold increases and the price increases.

Gold is always in demand as it has a wide range of uses in everything from jewelry to electrical appliances. But it has become one An increasingly popular investment For the reasons listed above in recent years, which has resulted in the sky-high prices we’ve seen lately.

Economic uncertainty

The past few years have been a tough time economically. Global and national economies are still reeling from the effects of the pandemic, which has resulted in everything from job cuts to business closures. recent Bank failure Consumers fear about the security of their money has increased.

When the economy is struggling, investors lose faith in traditional assets like stocks and bonds and turn to gold. safe haven, causing increased demand and subsequent price increases. For example, Reuters The Fed reported a rise in gold prices after forecasting a recession in its March minutes. Six of the eight largest stock market crashes of the past 40 years have seen gold prices rise gold silver.

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Inflation

Inflation has been a constant thorn in the side of consumers over the past few years. Core inflation Hit 8.5% in March, the highest in 40 years. Currently, it stands at around 5%, still above the Fed’s target rate of 2%. Inflation increases the price of goods and services, the purchasing power of the dollar decreases, and investors look for ways to protect their wealth.

Gold has long been considered reliable Hedge against inflation. As one of the oldest forms of currency, its value has remained historically stable despite market downturns. As a result, when the US dollar is weak, gold is seen as particularly valuable and this value is reflected in higher prices.

For example, during the hyperinflation of the 1970s and 1980s, the price of gold rose from $35 to $850 per share. Nasdaq.

Bottom line

This year’s surge in gold prices reflects investor confidence in the precious metal as the economy falters. But gold a Smart investment in any economy And the price of gold only A factor to consider Time to decide if you should invest. That said, gold is best seen as a Long term investment. Its ability to weather economic turbulence makes it a valuable addition to any portfolio for many years. So, wherever the price goes in the future, Invest in gold now May be a worthwhile decision.