Gold is up approximately $145 over the last month and more than $740 above this time last year. Moreover, a review of the well-established drivers of the gold price suggest this precious metal has several fundamentals acting in its favour.
Geopolitics boosting the gold price
Gold is well known as a safe-haven asset. This is certainly an attractive feature at present, when hotly contested elections by strongly opposing candidates appear to be the norm. Conflict in the Middle East and Ukraine are worryingly entrenched. And China continues to challenge the US’s status as the dominant global superpower.
Inflation is gold’s friend
Price increases are certainly cooling off in South Africa (mercifully) and some major economies, but inflation remains a sticky problem. However, even these lower levels of inflation support the argument for investing in gold to retain and grow value when cash continues to lose its buying power.
We can take the lead from central banks on this. These institutions are increasingly upping their purchases of gold as a hedge against economic uncertainty and for diversification away from currency.
A safe bet
The recent series of record highs for gold was not unexpected. Far from it. The gold price has risen steadily over recent years, which has been benefiting investors. For example, our 1nvest Gold ETF, which holds gold and tracks its price closely, is up 118.92% over the last five years.
If you think gold could be a valuable addition to your portfolio, our 1nvest Gold ETF is a simple, cost-effective and transparent way to invest in gold.
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