Gold Just Passed Another Major Milestone. Here’s Why

Estimated reading time: 3 minutes

Gold prices just broke another record, passing $2,600 per ounce for the first time last week, a key milestone as the precious metal’s strong performance in 2024 continues. So what’s going on?

Gold Rush

The price of gold started the year around $2,000 per ounce. Its price has increased by nearly a third since then, not despite but because of the uncertain economic climate.

Gold is a so-called “safe haven asset” and investors flock to it in times of turbulence – no matter whether political or economic.

The yellow metal has held value for much of history. The thesis goes that because it is also a physical asset (think gold bars) and not just a financial asset like an option, for example, it would hold its value better. If you have ever heard people talk about “a store of value,” this is what they mean.

Central bankers and investors alike have piled into the precious metal, not least because of the ongoing geopolitical conflicts in the Middle East and Eastern Europe.

And the Federal Reserve plays into it as well. Last week, the U.S. central bank cut rates for the first time in more than four years. Lower rates typically dampen the yields of interest-paying assets like Treasuries (which are also considered safe havens), making it less of a sacrifice for investors to park money in gold, instead of another asset.

How High Can It Go?

Gold exchange-traded funds (ETFs) have experienced four consecutive months of inflows, per an August report from the World Gold Council (WGC). The WGC also expects demand from central banks to remain strong through the end of the year, adding some tailwind to gold’s ascent.

Major financial institutions predict the rally will continue into next year, too. Goldman Sachs forecasts that the spot price of gold will reach $2,700 in 2025, for example. The firm pointed to geopolitical shocks, rate cuts, and international concerns over potential U.S. tariffs as factors that could drive the price even higher in the future.

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