Gold Price Soars to Record $3,871 as Demand Surges
Gold prices have soared to a new record of $3,871 per troy ounce, driven by strong demand for gold ETFs and several global factors. UBS Investment Bank has highlighted the significant role of ETF inflows in boosting the gold price today.
This year has seen a significant increase in demand for gold ETFs, with holdings 70% above the 2020 level. UBS has previously analysed this influence, with Jérôme Allet from UBS Investment Bank noting the substantial impact of ETF inflows on the gold price. In fact, gold ETF demand now has a 50% stronger influence on the gold price compared to previous years.
Five key factors are driving the gold bull market. These include loose monetary policy, inflationary US trade policy, escalating fiscal policy, potential US government shutdown, and geopolitical uncertainties. The latest increase in the gold price was driven by the potential US government shutdown and geopolitical statements by German Chancellor Friedrich Merz. If the dollar continues to depreciate or geopolitical risks re-emerge, the next target for the gold price could be $4,000 per ounce.
The gold rally is powered by two major demand sources: central banks and ETF investors. The gold price in Swiss francs has also reached an all-time high, nearing the 100,000 franc mark. The Fed's easing policy and potential inflation risks remain the most important positive factors for the gold price, which has surged by 46% since the beginning of the year.
