Business News : Major investors and industry leaders around the world believe that gold prices could touch a new record high in the next 24 months. According to a report in the Financial Times, central banks around the world have increased their gold purchases. Rising concerns over government debt, inter-state tensions and questions about the dominance of the US dollar are supporting demand for the precious metal.
Recently, the price of gold has decreased
This prediction of a significant increase in the price of gold comes at a time when its price has recently fallen slightly. On Wednesday, gold fell 2 percent to 4,075 per dollar a troy ounce. The decline came amid expectations that the US Federal Reserve may raise interest rates again. However, on the next day, Thursday, the international market and futures market (MCX) saw some improvement.
Despite the decline, gold prices at historically high levels
Earlier, in January, gold hit a record high of over $5,500 a troy ounce before falling. Despite that decline, gold prices remain at historically high levels. According to the report, fund managers expect gold to improve as investors seek safe havens amid growing economic and financial market uncertainty.
Why are wealthy households selling government bonds?
Peter Marrone, chairman and chief executive of mining company Allied Gold, told the news outlet that investors should consider whether global markets are headed for a major financial disruption. As economic uncertainty intensifies, family offices that manage the investments of wealthy families are increasingly turning to gold, Peter Marron said. Some of these investors are reducing their holdings in government bonds in favor of gold.
Similarly, Ian Cockerill, chief executive of gold producer Endeavor Mining, cited concerns about fiat currencies, economic instability and central banks’ efforts to maintain the value of their treasuries as factors supporting gold prices. Cockerill suggested that gold could reach a low of $4,000 per troy ounce, or a price floor, before another possible rally. However, he cautioned that this level is not certain to last.
Why trust gold more than paper currency?
Charlotte Yong, fund manager at Troy Asset Management, said at the Financial Times’ Precious Metals Symposium on Wednesday that gold could hit new record highs in 12 to 18 months. Yong sees gold as a hedge against deteriorating government finances, particularly rising US debt. He also pointed to the possibility that central banks could increase the money supply during future recessions, which could undermine public confidence in the currency. He added that, unlike paper currency, gold cannot be created by increasing the money supply. This makes gold attractive to investors looking to protect their wealth.
Many countries are moving away from the US dollar
Paul Carney, delegated chief investment officer for Europe, Middle East and Africa at Aon Investments, also expects gold to reach new highs in two years. Paul Korn cited US policies and the use of the dollar as a geopolitical tool as factors that could prompt other countries to seek alternatives to the US currency. He said that if governments and financial institutions become less dependent on the dollar, this could benefit gold.
Along with major banks, China also filled its coffers
As central banks continue to be an important source of demand for gold, emerging market institutions are trying to diversify their holdings away from the US dollar. Central bank gold purchases in September reached their highest monthly level since November 2024, showing purchases of around 63 tonnes so far, according to preliminary data from the World Gold Council. These figures are compiled using data from central banks and the International Monetary Fund.
China continued to increase its gold reserves
China has continued to increase its gold reserves in recent months. According to World Gold Council data cited by the Financial Times, the People’s Bank of China holds about 2,410 tonnes of gold reserves, about 9 percent of its total reserves.