The price of gold has reached another all-time high, standing at 2,259 euros per ounce. Economic uncertainty, geopolitical tensions and the Fed’s likely interest rate cut are driving the price of gold higher up, which has risen 17% since the beginning of the year.

Gold has hit another all-time high as the Federal Reserve (Fed) looks ahead to the expected rate cut amid economic and geopolitical uncertainty. On Monday, the price of gold reached 2,259 euros per ounce, surpassing the previous record set in April, to stand at 2,235 today.

Since the beginning of the year, gold has risen 17%, following the upward trend of 2023 when, although it experienced some fluctuations throughout the year, it rose 15% on the back of the US banking crisis, geopolitical tensions, war conflicts and the US Federal Reserve’s monetary policy.

Analysts are positive about the upward trend in gold prices, which in recent days have been strongly boosted by the latest macroeconomic data from the United States. Headline inflation rose to 3.4% in April, mainly due to higher energy prices adding to goods price inflation. Excluding energy prices, core inflation slowed to 3.6% from 3.8% in March, reviving expectations that the Fed will finally cut interest rates.

Investors had expected two rate cuts by the end of the year, which could come in the face of slower-than-expected growth and persistent inflation. The US economy could be heading towards a stagflation scenario that would be difficult to correct because monetary and fiscal measures to combat stagnation tend to spur inflation and vice versa.

Is this a good time to buy gold?

In the current economic context, gold has once again shown itself to be a key investment for those seeking to protect their wealth against market volatility or to obtain returns on their savings, well above the remuneration offered by banks for their customers’ deposits. But will the price of gold continue to rise?

Gold prices are multifaceted and rarely respond to a single trigger, but are driven by several factors, even so, some factors indicate that the upward trend will continue. Leaving aside the possible lowering of interest rates by the Fed, in the current geopolitical environment, the US administration’s increasing instrumentalisation of the global financial system to sanction countries that do not align with Washington’s foreign policy has created distrust of the Western-dominated monetary system.

This has been accompanied by a technological Cold War against China and fear of a debt crisis in the US. The Asian giant intentionally minimises its exposure to the dollar, buying large amounts of gold, more than 300 tonnes of gold worth $561 billion in the last eighteen months alone, and selling more than $74 billion worth of US Treasury bonds in the last year.

On the other hand, gold’s meteoric rise could also be driven by the US presidential election in November, which Donald Trump has a good chance of winning and which presents a very favourable backdrop for the gold price to reach $3,000 per ounce much sooner than expected.

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