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There is no question that gold’s unique investment benefits always attract a certain level of interest from investors. After all, gold offers unparalleled benefits as an investment vehicle, from acting as a safe place for the wealth of investors to provide a hedge against inflation. A proper gold allocation can also help protect an investor’s portfolio against losses from other asset types, so there is often significant value in adding it to your asset mix.
But when gold has long been worth considering for investors, surprising rise in the price of gold over the past few months has been in the spotlight, attracting the attention of investors and beginner equal. This trend first started on March 8, when the price of gold hit the first record of the year. A month latergold has broken that record – and then did it again at the end of May and mid Augustwhen it reached an unprecedented $2,525 per ounce.
When the price of gold has moderated a bit in the time since, it is still only a few dollars in the latest record – despite the cooling inflation environment that usually leads to a downturn in gold prices. And as we close in September, we can see bullish gold prices continue. Below, we will detail why.
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Could the price of gold rise in September?
Here’s why we can see gold prices continue to rise in the coming months:
Central banks buy
One of the most important drivers for rising gold prices is aggressive purchasing by central banks around the world. This trend shows no signs of slowing down, as many countries seek to diversify their reserves away from traditional currencies. Continued demand from institutional buyers provides a strong foundation for continued price appreciation and may play a role in the trajectory of gold prices over the coming months.
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Economic and geopolitical uncertainty prevails
The global economic landscape remains full of uncertainty. Persistent inflation concernsthe risk of a potential recession in major economies and ongoing geopolitical tensions creating an environment gold safe-haven status become more attractive. As investors seek to hedge against this risk, demand for gold is likely to remain strong, potentially pushing prices further.
Investor demand remains high
Despite the recent price hike, investors appetite for gold does not appear to have decreased. Many see the current price level not as a deterrent but as a confirmation of gold’s value proposition – and an opportunity to buy and potentially turn a profit sooner than normal. Sustained demand from retail and institutional investors could continue to support higher prices in September and beyond.
There is a growing industrial demand
When investment demand often dominates the discussion about gold prices, it is important not to overlook the metal use many industries. As technology advances, gold’s unique properties make gold increasingly valuable in a variety of applications, from electronics to healthcare. This is expected to increase the industry another layer of support for the price of gold.
Industrial applications for gold are particularly important. As the industry continues to innovate, demand for gold in technology applications will increase, possibly supporting higher prices in the long term. For example, gold’s excellent conductivity, corrosion resistance and flexibility make it an ideal component in many high-tech devices, from smartphones to advanced medical equipment.
supply growth is limited
The supply side of the gold market also plays an important role in price dynamics. Factors such as limited new gold discoveries and the increasing challenges and costs associated with extraction may contribute to sustained long-term price appreciation. As easily accessible gold deposits become scarce, production costs rise, potentially setting a higher floor for gold prices.
Bottom line
While the price of gold has moderated slightly from the latest record, it remains within striking distance of its peak. As we move into September, the confluence of these factors – central bank buying, economic uncertainty, continued investor demand, heavy industrial use and supply constraints – make a strong case for continued gold prices. However, it is important to remember that the gold market, like all financial markets, is subject to volatility and is influenced by a complex interaction of factors. So, while the outlook for gold in September looks positive, you should consider your unique financial goals and risk tolerance when making investment decisions.
