The price of gold has recently reached a new all-time high, hitting $2,729.30 per ounce on October 21, 2024, what does inflation have to do with it?
This increase represents a gain of over 30% since the beginning of the year, marking an important milestone for the commodities market. The surge in gold prices has been fueled by a combination of factors, including rising geopolitical tensions and growing global inflation.
Gold price and inflation: a complex relationship
Historically, gold has been considered a safe haven during periods of economic uncertainty. Its ability to maintain value during crises makes it a preferred choice for investors, especially when financial markets show signs of instability.
With the increase of inflation at a global level, many investors seek to protect their capital by investing in gold. This precious metal has a long history as a hedge against inflation, given that its value tends to rise when the purchasing power of the currency decreases.
In recent years, inflation has become an increasingly pressing concern for economies around the world.
With the increase in energy and food costs, combined with the stagnation of wages in many areas, the cost of living has risen rapidly. This has pushed investors to seek safer assets, such as gold, which traditionally offers protection against the loss of value of fiat currencies.
Another crucial factor that has pushed the price of gold to historic highs is represented by the tensions in the middle east. The ongoing conflicts in the region and political uncertainty have led many investors to seek refuge in gold.
Gold is seen as a safe asset, a refuge asset that has historically proven to protect investors’ portfolios during periods of high volatility and geopolitical risk.
In addition to the Middle East, the fierce competition of the presidential elections in the United States has added an additional layer of uncertainty to the global landscape.