Gold prices rise amid geopolitical tensions, economic uncertainty

(MENAFN) Since the beginning of the year, gold prices have surged by over 17 percent, reaching USD2,486 the day before yesterday. This rise is driven by investors seeking a safe haven amidst escalating geopolitical tensions and the anticipation of an interest rate cut in September. Comparatively, gold was priced at USD2,078.4 per ounce at the end of last year. On July 17, 2024, gold achieved a new record high of USD2,480.3 per ounce, according to daily data from the World Gold Council, marking a significant milestone as it had surpassed the USD2,400 mark for the first time on April 12. The yellow metal initially jumped above USD2,000 per ounce on August 5, 2020, during the height of the Covid-19 pandemic fears.

The World Gold Council's data reveals that China made a net purchase of 28.9 tons of gold in the first four months of this year. Additionally, the urban consumer price index in the United States rose by 3 percent during the 12 months ending in June 2024, according to the US Bureau of Labor Statistics. This index last fell below 3 percent in March 2021, when it rose by 2.6 percent annually. These economic indicators contribute to the rising demand for gold as a safe investment.

Global gold demand in the second quarter of 2024 increased by 4 percent year-on-year, reaching 1,258.2 tonnes, the highest second-quarter demand rate since 2000, as per the World Gold Council data. This surge in demand was notably influenced by a 53 percent increase in over-the-counter investment, which amounted to 329.2 tonnes in the latter half of the quarter. Furthermore, central banks continued to bolster their gold reserves, with purchases rising by 6 percent year-on-year to 183.4 tonnes in the second quarter. This consistent demand from central banks and investors alike underscores the ongoing reliance on gold as a stable asset amidst global economic uncertainties.

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