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Gold surges 22% this year despite market trends

Gold surges 22% this year despite market trends

GrafaGrafa2024/08/21 04:30
By:Liezl Gambe

The price of gold has achieved a new all-time high, trading at $2,543.76 per troy ounce.  

This significant milestone represents a 22% increase in gold’s value this year, notably outperforming returns seen in the stock market.  

Gold is traditionally considered a safe haven asset, often sought after during periods of financial instability.  

However, this year has revealed a shift in gold's performance dynamics.  

Despite its typical role as a counter-cyclical asset, gold's rise has occurred concurrently with a notable 18% gain in the SP 500 Index.  

Historically, gold tends to move inversely to equities, serving as a refuge when stock markets falter.  

This year, however, has shown a different pattern.  

Following the SP 500's record high on July 16, the index experienced a decline of 8.5%, during which gold also dropped by 2.3%.  

Yet, as the SP 500 rebounded with an 8.1% increase, gold advanced by 5.2%.  

This synchronisation between gold and stock market movements highlights a shift in the traditional relationship between these assets.  

Despite a backdrop of stronger economic growth and moderated inflation in the U.S., gold’s performance has exceeded many expectations.  

This strong showing is partly attributed to persistent demand from global central banks.  

Central banks acquired a record amount of gold in the first half of the year, surpassing the previous record set last year.  

The World Gold Council’s latest survey indicates that central banks are likely to continue increasing their gold reserves into 2025.  

In fact, 29% of reserve managers are planning to boost their gold holdings, marking the highest level of planned increases in six years.  

Gold's resilience amid strong stock market performance and economic growth underscores its evolving role as a critical investment asset.  

While it has not always demonstrated an inverse relationship with equities, this year’s performance highlights its enduring appeal and strength across varied economic conditions.  

This evolving trend may reshape traditional views on gold as a financial asset.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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