Gold prices shoot to record: $2,266 per ounce

The prospect of interest rate cuts is boosting the yellow metal. And experts expect the gold price to go a bit higher this year.

At $2,265.73 per ounce (31.1 grams), the gold price hit a fresh record on Easter Monday. Since Friday morning, gold has become 3 percent more expensive in dollars, and 9 percent since the beginning of this year.

For Belgian gold beetles, the gold price in euros is especially important. It has already shot up 12 percent this year. This means that gold (in euros) is on its way to the best year since the corona year 2020, when the precious metal became 15 percent more expensive. Investors traditionally turn to it in times of panic, wars or uncertainty. Anyone who wants to buy a 1 kilo gold bar now has to pay more than 67,000 euros for it, also a record.

To explain the recent boom, traders point to the publication of the Federal Reserve’s (Fed) favorite inflation gauge on Friday afternoon. It cooled down in February. Lower inflation will allow interest rate cuts by the US central bank later this year. Because gold is an investment that does not offer interest, it becomes relatively more attractive at lower interest rates.

‘The US inflation rate has given gold an additional boost. The market is increasingly convinced that the Fed will cut rates from June,” said ING commodity strategist Warren Patterson. The markets are taking into account a total interest rate cut by the Fed of 75 basis points in 2024. Several interest rate cuts are also expected from the European Central Bank (ECB).

Gold is also benefiting from strong demand from China. Consumers appear to be fleeing to the metal in response to the country’s economic problems. And the Chinese central bank has increased its position in gold every month over the past 16 months. Other central banks in the so-called growth markets are also proving to be net buyers.

Finally, the wars in Gaza and Ukraine continue to drive the gold price. Investors looking for a safe haven end up in the precious metal.

The brokers are becoming increasingly optimistic. JPMorgan calls gold “its favorite in the commodity markets” and forecasts a price of $2,500 per ounce this year. Goldman Sachs is targeting $2,300 and mainly refers to the prospect of interest rate cuts.

Investors who want to benefit from the gold boom can do so in several ways. The classic way is through the purchase of gold coins or bars. This used to be possible at any major bank, but nowadays you can mainly go to specialized gold dealers. The well-known Krugerrand gold coin, which weighs 1 ounce, now costs more than 2,100 euros.

The easiest way is to purchase a gold tracker, a listed fund that physically invests in gold itself. Two such trackers that are popular in Belgium are iShares Physical Gold and Invesco Physical Gold. They charge just 13 and 12 basis points annual management fees respectively and are listed on the stock exchanges of London and Frankfurt, among others. Those who prefer to work via the Amsterdam stock exchange can go to WisdomTree Physical Gold (39 basis points management costs).

Another option is investing in a gold mine. Gold mines often provide leverage on the gold price. But a gold bar cannot go bankrupt, but a gold mine can. The biggest players are Newmont

and Barrick Gold

, which list on Wall Street. Both shares will soon shoot up almost 3 percent, US pre-market trading shows.

To eliminate the risk on one specific mine, a tracker can also offer a solution in this case, because it invests in multiple gold mines. A gold mine tracker popular among Belgians is VanEck Gold Miners. It is listed on the London, Milan and Frankfurt stock exchanges.