With gold now trading above $2,500 a troy ounce, a 400-ounce bar of gold is now worth $1 million for the first time ever, Bloomberg reports.
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Gold prices marked a record high Tuesday, as investors flocked to the safe-haven asset amid a record-breaking rally driven by expectations that the Federal Reserve will deliver an interest rate cut next month.
Spot gold was up 0.7% at $2,522.17 per ounce, as of 09:07 GMT (4:07 a.m. EST) Tuesday, nearing a previous record hit of $2,526.50 on Friday. U.S. gold futures gained 0.8% to $2,561.10.
Of course, there are some nuances to the $1 million gold bar milestone. Gold bars on the London market normally weigh 400 ounces of pure gold, according to the London Bullion Market Association. However, smaller, more affordable bars are available at popular retail outlets like Costco.
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In the first half of the year, central banks were net purchasers of 483.3 tons of gold. With this equivalent to nearly 40,000 bars, the current value of these central bank purchases would be roughly $40 billion.
Banks’ steady purchases of gold is one of the biggest reasons fueling the metal’s blistering rally this year.
Another reason gold has reached record highs is the inflationary policies of President Joe Biden and Vice President Kamala Harris. With inflation up 22% in the past 3-1/2 years of the Biden-Harris administration, investors have flocked to gold to preserve the purchasing power of their U.S. dollars.
Should Democrat presidential candidate Harris get elected in November, inflationary pressures are likely to continue. Recent polls show Harris taking a lead over Republican presidential candidate and former President Donald Trump. Nearly half of U.S. adults — 48% — have a very or somewhat favorable view of Harris, according to a poll from The Associated Press-NORC Center for Public Affairs Research released Monday.
Global markets are also worried about a slowdown in the China and Japan economies. In addition, fears are growing about escalating wars in Ukraine and the Middle East. Ukraine successfully invaded Russia's Kursk region, and Iran has vowed to retaliate against Israel for the killing of a Hamas leader in Tehran.
Gold traders are also refocusing on the prospect of lower U.S. interest rates, attracting Western safe-haven seekers back to the market, as shown by inflows into physically backed products, said Carsten Menke, an analyst at Julius Baer.
“Considering the weakness of the Chinese economy and the geopolitical tensions involving China,” Menke said, “we believe there is a very high likelihood that sooner or later, buying will resume. We currently have a 12-month price target of $2,600 per ounce.”
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With reporting by Reuters.
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