Post by : Rameen Ariff

Gold prices surged past $4,000 an ounce on Wednesday, reaching a record high as investors sought safety amid growing economic and geopolitical uncertainties. Expectations of further interest rate cuts by the US Federal Reserve also boosted demand for the precious metal. Gold has risen 52% this year, driven by central bank purchases, easier monetary policies, a weaker US dollar, and increased investor interest.

Large institutional buyers and banks usually trade gold in the spot market, where prices are set in real-time based on supply and demand. London is the most influential hub, regulated by the London Bullion Market Association, with China, India, the Middle East, and the US also playing major roles. Investors can also trade gold through futures contracts on exchanges like COMEX in New York, the Shanghai Futures Exchange, and the Tokyo Commodity Exchange (TOCOM), allowing them to buy or sell gold at a set price for a future date.

Exchange-traded products (ETPs) and ETFs backed by physical gold let investors gain exposure without taking physical delivery. Globally, inflows into physically-backed gold ETFs reached $64 billion this year, with $17.3 billion added in September alone. Retail investors can purchase physical gold through bars and coins from dealers or online platforms, which remain a popular method for long-term investment.

Rising investor interest, market sentiment, and global economic news heavily influence gold prices. Gold is also a hedge against US dollar volatility, as a weaker dollar makes gold cheaper for foreign investors, increasing demand. Trade wars, tariffs, and global uncertainties enhance gold’s safe-haven appeal, while central banks continue to expand their gold reserves. In 2024, global demand for gold, including over-the-counter trading, hit record levels, with China’s holdings rising to 74.06 million fine troy ounces by September. Gold remains a key asset for investors and central banks worldwide, offering protection in uncertain economic and political environments.

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