If you’ve paid any attention to the precious metals market recently, you’re probably aware that gold has been on a roll an impressive upward trajectory since the beginning of the year. On January 1, gold was traded at $2,063.73 per ounce. Fast forward to today (October 25, 2024), and the gold price stands at $2,734.46 per ounce. This represents an increase of $670.73 per ounce, representing growth of approximately 33% in just over 10 months. This significant growth has caught the attention of investors and market analysts worldwide, as gold’s performance defies predictions and underscores its historic role as a stable store of value.

The latest rally becomes even more remarkable compared to gold’s previous record highs. Right now in August the price reached $2,525 per ounce — a milestone that marked a new high at the time. But the price of gold was far from plateauing at that point. The price of gold continued to rise, eventually surpassing that mark by over $200 an ounce. This upward movement has established the past year that an outstanding year for goldwhich attracts investors who may have initially seen these peaks as ceiling prices, but now see the gold price potential as much more expansive than expected.

But while there’s no doubt that gold has offered some of the biggest returns over the past year, many investors is questions exactly what is driving this sustained increase. So why is the price of gold so high right now? That’s what we’ll break down below.

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Why is the price of gold so high right now?

Here are some of the factors that have driven the price of gold to new heights over the past year.

The central banks buy in

A primary force behind gold’s recent bull run is central banks’ purchasing activities worldwide. Central banks, especially those in emerging economies, are increasing their gold reserves as one hedge against financial uncertainty and to diversify their holdings away from traditional fiat currencies. This sustained buying pressure from such powerful market players has created a strong basis for price appreciation and signals a broader shift in institutional attitudes towards gold as a strategic asset.

Investors benefit from short-term gains

In addition to central banks, individual investors have been flock to goldsees an opportunity for both short-term and long-term profits. With gold prices rising so rapidly, gold has become an attractive asset for speculative trading as well as a safer, long-term investment. So some investors are now seeking quick returns by betting on the momentum of gold’s climb to earn quick profits, while others continue to rely on the stability of gold.

The rush of buying and trading activity creates a feedback loop, further driving up demand and prices. This mix of trading activity has been a core factor in the consistent upward price movement over the past year, illustrating gold’s dual role as both a stable store of value and a source of short-term market tension.

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More investors are diversifying

Ongoing geopolitical tensions, including election-year uncertainties, also exist plays into the gold price rise. Elections can affect market sentiment by adding uncertainty, which often triggers interest in safe-haven assets like gold. In addition, global economic downturns and international conflicts, such as those involving energy trade disputes, have introduced more volatility to the global market, leading investors to seek refuge in gold.

With each spike in uncertainty, gold’s appeal as a safe, uncorrelated asset increases, attracting investors looking to hedge against potential market downturns. For many, gold remains a reliable protection, reinforcing its role as a cornerstone in diversified portfoliosespecially during periods of unpredictability.

The limited supply also plays a role

The limited supply of gold has also contributed to it latest price increase. After all, gold is a finite resource and mining new gold is both costly and time-consuming. As demand grows from both investors and industrial sectors, pressure increases on gold’s limited supply, raising its value.

Technological advances in sectors such as electronics and green energy have also done so increased the usefulness of gold. Gold is used in electronic components, medical equipment and emerging green technologies, creating steady industrial demand. This expanding industrial application is a lesser-known but increasingly important factor, enhancing gold’s value beyond traditional uses.

The bottom line

The remarkable rise in gold prices in 2024 can be attributed to a perfect storm of global economic and political factors. Significant purchases by central banks, investors’ pursuit of both safety and short-term gains, geopolitical uncertainties and the finite nature of gold have converged to create a robust and sustained rally.

Looking ahead, many analysts believe that gold’s trajectory can continue upwardsespecially if central banks and industrial sectors maintain their interest and if global uncertainties persist. While the current price rally may eventually stabilize, investors and analysts alike continue to keep an eye on this precious metal right now, as gold continues to set new records and plays an important role in today’s dynamic economic landscape.