Gold prices have soared to historic highs in 2024, with spot prices reaching $3,433.55 per ounce – a level unseen since 1978. The precious metal has delivered a staggering 41.8% return over the past year, outperforming global stocks, bonds, and commodities. But as investors flock to gold amid economic uncertainty, experts urge caution amid the glittering numbers.
Wang Jianhui, general manager of research at Capital Securities, notes that while gold remains a popular hedge, its 15.02% volatility over the past year rivals stock market swings. "Gold investors can lose money like anyone else, particularly newcomers or those using leverage," he warns.
The rally stems from three key drivers: central bank policies, inflation pressures, and geopolitical tensions. Between 2020-2022, near-zero interest rates from the U.S. Federal Reserve, European Central Bank, and Bank of Japan fueled an 18.6% price jump. When inflation peaked at 1997-era levels across major economies (9.1% in the U.S., 10.6% in the EU), gold surged another 42.8% as investors sought stability.
While some analysts see room for growth given ongoing economic headwinds, Wang emphasizes that gold's performance remains tied to complex macroeconomic forces. "The Fed's rate decisions and global inflation trajectories will likely determine whether this golden moment becomes a sustained era or a temporary spike," he concludes.
