Gold passes $2,500 for the first time ever

Five charts to start your day

There was a lot of press coverage on this topic last week. Gold has surpassed $2,500 for the first time ever. Here are three reason why the price of gold has risen, plus a data visualisation that maps out this price rise.

Central bank purchases

Emerging market central banks, particularly in China and India, have significantly increased their gold reserves to protect themselves in a more fragmented global economy. Some, like China, might also be hedging against potential future sanctions, trade wars, or conflicts, prompting them to diversify their reserves.

Geopolitical tensions

Global instability, such as the Gaza conflict in October 2023, which caused a 6% spike in gold prices, has driven up demand for gold as a safe haven. This “safe-haven” demand is typical during times of war or political instability, including the ongoing conflict in Ukraine.

Interest rate and US dollar dynamics

The US Federal Reserve’s indications of pausing or cutting rates have lowered real interest rates, reducing the cost of holding gold. Additionally, a weaker US dollar has made gold cheaper for buyers using other currencies, particularly in emerging markets, further boosting demand.

Source: Eeagli

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