The yellow metal once again reached an all-time high, at $2,790 per ounce. Since the start of the year, it has gained almost 38%. This increase is surprising because the stock markets have also climbed and the two assets generally move in opposite directions.
When one advances, the others retreat. At least in theory. However, in recent weeks, gold and the stock markets have been hitting a string of highs. The yellow metal reached a historic record on Wednesday at $2,790 per ounce (or 31 grams), while the American Stock Exchange’s technology stock index did the same two days earlier. This, while these assets generally have different drivers.
Another mystery is that gold is considered a hedge against inflation. It should therefore have jumped in 2022 when the price surge started, which was not the case, it even lost value. It should then have fallen again or, at least, stabilized at the end of 2023, or even this year, when inflation was brought under control by the Central Banks. In fact, the opposite happened because that’s when his meteoric rise began. Since the start of the year, the precious metal has climbed almost 38%.
And the mystery continues: in principle the strong dollar and high interest rates tend to make gold fall, but here too, the yellow metal defies market theory since everything rose at the same time.
Geopolitical uncertainties
Many experts remain perplexed by this continued rise. Among the reasons given, geopolitical concerns are first and foremost. They represent a driver for gold, which serves as a refuge for investors during tensions. What they are also doing with the franc, which has also appreciated significantly in recent weeks.
The war in the Middle East can therefore explain why gold is so successful. But this theory has its limits. If uncertainty worried investors so much, on the one hand, the stock markets should fall. On the other hand, oil should react strongly even though it has remained almost unmoved by these tensions.
American presidential election in the crosshairs
Specialists put forward other reasons, notably its appeal as an alternative currency to the dollar. A role that the yuan struggles to play. Gold, on the other hand, has always convinced those who are wary of currencies under the control of governments and central banks.
But none of these avenues completely convinces observers. No more than that of the uncertainties linked to the American presidential election are also likely to increase the price of gold.
On the other hand, the experts are more advanced on the impact that the result of the election will have. An uncertain or contested outcome could once again boost gold’s appeal. Conversely, a victory for Kamala Harris with a majority for the Democrats could stabilize or even lower its price. Unlike a Trump victory, which could especially cause stocks to jump. In this scenario, the two assets could therefore start working in opposite directions, as the theory dictates.
Mathilde Farine
