The price of gold is on the rise. More than 26% since early November, to be exact. As of April 2024, gold prices per ounce were $2,400, compared to November at $1,900 per ounce. Gold is a volatile commodity, so it isn’t unusual for it to experience significant shifts in value over short periods. But that raises the question, why is it happening, and how does it impact investors interested in selling their gold assets or using them as collateral for a gold loan?
Book an appointment today for a free, no-obligation loan quote.
Historical Context Behind the Value of Gold
Gold is inherently valuable and commands a premium over other metals, such as silver and copper, because of its unique luster, demand for jewelry, and, most importantly, its historical significance as a common form of currency, dating as far back as 500 and 600 BCE. Gold is hard to find, yet easy to manipulate into manageable forms of currency, such as coins or bricks. As a result, it was an established medium of exchange for most of the world and even persisted as a backing for currency under the gold standard until just last century. The gold standard was discontinued decades ago, but the precious metal remains a reliable store of value worldwide and a hedge against inflation. Gold is also common in various industrial applications, adding to its immense value.
Why Is Gold Expensive? How Is Gold Valued?
There are several possible reasons for the massive surge in gold prices as of late, from expectations that the Federal Reserve will slow its recent hike in interest rates to conflicts overseas and growing central bank gold reserves.
Demand for Gold Jewelry: The United States, China, and India are the largest gold consumers in the world. As demand for the precious metal in the fashion and industrial sectors rises in those industries, so will gold prices.
Global Central Bank Reserves: Geopolitical tensions and increased gold reserves can impact gold prices. As conflicts emerge between countries overseas, many have opted to invest in gold instead of other stocks to safeguard their wealth. Additionally, global central banks have been buying more gold recently, and in large enough amounts, causing the price of gold to rise.
Supply and Demand: Limits on gold production greatly affect the value of the precious metal as demand rises. For example, most of the accessible gold has already been mined. This factor greatly limits the amount that makes it to market and complicates other logistics, such as occupational hazards for the miners who must now head deeper into mines. These factors tied to supply and demand greatly impact how gold is valued.
Interest Rates: Historically, the value of gold will drop when interest rates are high because higher rates mean better returns on other investments. Many expect the Federal Reserve to ease off on interest rate hikes in 2024, which has boosted the value of gold.
Gold as an Inflation Hedge: Gold is categorized as a “safe haven” investment because it typically holds its value or rises when other assets or stocks aren’t performing well and can help hedge against inflation. When returns on other assets decrease, worried investors will often put their money in gold instead.
The Value of the U.S. Dollar: Gold is generally denominated in U.S. dollars. As a result, gold values will surge when the U.S. dollar weakens because it has become more affordable for other countries to buy. Alternatively, when the U.S. dollar strengthens, demand for gold usually dips.
How High Will Gold Go? 2024 Gold Price Predictions
What are the prospects for the rest of 2024? Gold performs well during high inflation, which has increased by 3.5% since last spring. Moreover, many financial experts predicted in 2023 that gold prices would rise this year, and they have. However, much of the rest of the year will depend greatly on factors such as whether the Federal Reserve will continue to lower interest rates to combat high inflation, the upcoming presidential election, and the prospective candidates’ views on fiscal policies. If there are signs inflation might continue to rise under a new presidency, demand for gold will likely continue to climb as Americans attempt to hedge against inflation.
It's hard to say if gold is a smart investment for 2024. However, with prices at an all-time high, there has never been a better time to maximize the value of your gold jewelry and other assets to create instant liquidity, either by selling it or borrowing against it. Qollateral is the industry’s most trusted and generous lender, providing the safest and highest offer loans.
Contact us to book an appointment with a skilled appraiser.
Call or text: 212-287-5257
100% Discreet
100% Safe
100% Secure
100% Risk-free
100% Insured
100% Satisfaction Guarantee
Content Disclaimer
The content provided by Qollateral, LLC is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our Site constitutes a solicitation, recommendation, endorsement, or offer by Qollateral, LLC or any third party service provider to buy or sell any commodities, securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Qollateral, LLC is not an attorney, accountant or financial advisor, nor is it holding itself out to be, and the information contained on this Website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.
All content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. Qollateral, LLC is not a fiduciary by virtue of any person’s use of or access to the Site or any content contained therein. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on the Site before making any decisions based on such information or other content. In exchange for using the Site, you agree not to hold Qollateral, LLC, its affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other content made available to you through the Site.
