What do high gold prices mean in a dangerous world?

The sharp rise in the price of gold – witnessed by global markets – reflects a significant shift in investment avenues in safe-haven assets, due to growing financial concerns and growing geopolitical tensions. grow worldwide.

The British Economist magazine reported that the price of gold recorded an increase of 38% this year, exceeding $2,700 per ounce, which led to a noticeable increase in consumer and investor interest in the yellow metal as a safe haven. , while many. Central banks are trying to improve their reserves due to the instability of the global financial system.

Many believe that gold provides effective protection against… Inflation It is considered a strategic way of diversification within investment portfolios, and it plays an important role in reducing financial risks, especially due to the desperate situations that some have raised, such as the United States defaults on its debt.

On the other hand, some major investors look at gold with concern, because they see it as an instrument that is not able to create a stable income. A study showed that only a quarter of American institutional investors own shares in gold exchange-traded funds, which explains why gold fund stocks did not rise despite the increase in prices.

Demand for gold

Data from specialist investment firm Campden Wealth shows that two-thirds of family investment offices – which manage the wealth of the world’s largest families – invest in gold, which will boost demand for its ‘ yellow metal, because the rich are trying to protect their wealth in light. of the worsening financial crises.

The Economist noted that the demand for gold is increasing significantly in China and India, where there has been a significant increase in buying gold bullion. India is considered one of the largest consumers of gold in the world, and demand increases during holiday seasons and traditional occasions.

According to the newspaper, the heads of central banks in the world have a key role in the rise of the yellow metal market, as the share of their reserves has increased to 11% over the last year, and this move shows that they are willing to go against the odds. economic conditions and acceptance of gold as a safe haven.

The Economist said that the Russian-Ukrainian war forced central banks to reassess their reserve strategies and increase gold reserves, which happened in countries such as Singapore and Poland. Developing countries are also aiming to improve their reserve strategies by turning to gold as a safe and reliable investment option.

The Economist concluded that it is expected that central banks and investors will continue to rely on gold, and that its prices will continue to rise, which will strengthen its position as a safe haven and one of the most reliable assets due to growing concerns about inflation and geopolitical tensions.

Factors that increase gold

A number of factors are contributing to the rise in gold, including:

• Some investors seek protection from the risks of higher than expected inflation.
• Other investors adjust their portfolios due to a rise in the stock market.
• We added geopolitical concerns, including the Israeli war Gaza Stripas well as Russia and Ukraine, along with the upcoming presidential elections last November, add to the list of uncertainties that make investors turn to gold.
• Analysts are closely watching interest rate cuts, which could affect US government bond yields, making other safe-haven assets such as gold more attractive.
• Increased gold purchases by central banks around the world.
• Increased tension between the United States and China if he wins Donald Trump Republican presidential candidate, and this is cited as reasons why the curve remains supportive of gold.