This month, gold prices have surged to an all time high of US$2586 (NZ$4179) per ounce.
Photo: 123RF
Gold prices have hit a record high, with more investors buying the precious metal in anticipation of interest rate cuts in the United States.
This month, gold prices have surged to an all time high of US$2586 (NZ$4179) per ounce (28.35g). So far this year gold has risen 26 percent.
The US Federal Reserve is expected to cut interest rates this week, with inflation there generally accepted to be under control.
Auckland-based MyGold chief executive Rich Elliott said this had contributed to rising global demand for gold.
“We see investors increasingly turn to gold as they expect the [US Federal Reserve] to reduce its benchmark interest rates. Then when interest rates decline, gold becomes more attractive compared to income generating assets like bonds. So, the expectation of rate cuts is seen as a primary driver for a bullish sentiment towards gold.”
But he said there were other factors at play.
“The US dollar weakness, the weaker US dollar has supported gold prices, but adding into that the market volatility. Higher market volatility is driving more investors towards gold as a safe haven.
“Then you add in the geopolitical uncertainty with conflicts in Ukraine and Gaza, traditional inflation hedge with gold being viewed as a protection against inflation, and then the central bank diversification – so many central banks seeking to reduce their reliance on US dollars and turning to gold instead.”
Elliott said gold prices have also hit record highs in New Zealand dollars at $4191 an ounce.