Gold. To Buy or Not to Buy?
From January to April 2024, the price of gold has increased by over 20%. Can gold become even more expensive? What is the cause, and what are the forecasts for the future?
Geopolitical Factors
The ongoing war in Ukraine since February 2022 and the conflict that began in the Middle East last October have shaken the markets. This has directly impacted central banks, which have started buying gold in large quantities. Since the beginning of 2024, central banks have purchased over 290 tons of gold, particularly those from emerging markets, diversifying their reserves due to fears of sanctions from the USA and the need to become less dependent on the dollar. China is leading in this area, followed by Turkey and India.
In the USA, the upcoming presidential elections raise concerns about whether a re-election of Donald Trump could increase geopolitical risks. Additionally, low interest rates discourage investment in bonds, leading investors to place their assets in gold.
Behavioral Factors
The mass purchase of gold by central banks signals that something significant is happening and that it might be wise to buy gold. Rising prices encourage investors who fear missing out on the ongoing upward trend. The media also plays a role, fueling the momentum with information about the expected rate of return.
Security and Stability
Many factors influence gold prices, but they can be summarized by the fact that gold provides a sense of security. Historically, it is the safest form of protection against inflation and geopolitical disasters. This is known not only by banks but also by average individuals like Smith and Muller.
Will Gold Become Even More Expensive?
Despite minor declines at the end of May, analysts believe that the price of gold will maintain an upward trend this year and is likely to reach $2,500 per ounce. The coming years may bring further increases in gold prices, so it might not get cheaper than it is today.
How Does the Price of Gold Affect the Jewelry Market?
The global interest in gold is also felt in jewelry stores. Despite increased demand for gold products, merchants fear the customer’s reaction to higher jewelry prices. Changes in the price of gold are particularly noticeable in items without stones, where the price largely depends on the weight of the gold. A solution to this situation could be jewelry where the main feature is the stone, with gold as an accessory. In such cases, the higher price of gold does not drastically affect the overall price, and the product appears larger and more attractively priced.