HISTORICAL PRICES FOR GOLD

The price of gold has reached all-time highs in recent months, reaching $2,000 per ounce on August 2, 2023. This represents an increase of more than 50%20 since the start of the COVID-19 pandemic in 2020.

Why has gold never been as expensive as it is now? There are a series of factors that explain this price increase, among which are:

Global economic and geopolitical uncertainty. The war in Ukraine, rampant inflation and rising interest rates have created a climate of uncertainty that has boosted demand for assets refuge like gold.
Short supply. Gold production has stagnated in recent years, while demand has increased. This has contributed to reducing supply and increasing prices.
Institutional investment. Institutional investors, such as pension funds and insurance companies, are increasing their investments in gold as a way to diversify their portfolios and protect against inflation.

Economic and geopolitical uncertainty

The war in Ukraine has been a key factor in the rise in the price of gold. The Russian invasion has caused a humanitarian and economic crisis in Europe, increasing uncertainty in financial markets. Investors look for safe haven assets that can protect their wealth in times of uncertainty, and gold is one of the most popular.

Inflation is also helping to drive demand for gold. Inflation has skyrocketed around the world in recent months, reaching record highs in many countries. Gold is an asset that maintains its value in times of inflation, so investors see it as a way to protect their purchasing power.

Rising interest rates are also affecting the price of gold. Central banks are raising interest rates to combat inflation, making riskier assets, such as stocks, less attractive. Gold is a less risky asset than stocks, which is why investors are opting for it instead of stocks.

Supply shortage

Gold production has stagnated in recent years. Gold mining is an expensive and complex process, and gold resources are becoming increasingly difficult to find. This has contributed to reducing the supply of gold and increasing prices.

The supply shortage is also being driven by China's growing demand for gold. China is the world's largest consumer of gold, and its demand is increasing as China's middle class grows.

Institutional investment

Institutional investors are increasing their investments in gold. Pension funds and insurers are looking to gold as a way to diversify their portfolios and protect against inflation.

Institutional investment is helping to increase demand for gold and push prices higher.

How long will this trend last?

It is difficult to predict how long this upward trend in the price of gold will last. The factors that are driving price increases, such as economic and geopolitical uncertainty, supply shortages, and institutional investment, remain present.

However, there are some factors that could moderate the price rise in the future. For example, if the war in Ukraine comes to an end, economic uncertainty could be reduced. Furthermore, if inflation begins to slow, the demand for gold as a safe haven asset could decrease.

Overall, the price of gold is likely to remain high in the coming months. However, the upward trend may moderate in the future if some of the factors driving it change.