Spot gold hit an all-time high of $3,079.01 this morning (Friday 28 March), before retreating slightly. Gold futures rose 1% to $3,090.30 per ounce and are up more than 8% on the month.
The new prices are the second time this month gold has soared to new heights, breaking the $3,000 per ounce value earlier this month.
The spike in prices to new record levels came after US President Trump announced new auto tariffs. The price of gold has also been helped by buying from central banks, particularly by China.
Part of the appeal of gold is as a hedge against inflation, which is staying stubborn in some economies amid concerns US trade policy could push up consumer prices further.
Gold’s rise has sparked a FOMO effect among individual buyers, with a spike in demand for jewellery showing up in the latest UK retail sales figures.
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Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Gold has been on another glittering run upwards as investors seek out safe havens for their money. While further steps towards a ceasefire in Ukraine could see prices ease off, violence continues in the Middle East.
“There is also a risk that geopolitical tensions escalate as opportunities in the Arctic are eyed by the US and Russia. If there are any indications that China may be poised to become more aggressive against Taiwan, there could be… a further pull towards the precious metal.
“However, historically over the very long term, the gold price has matched inflation. That puts the long-term expected return close to the return you would get on cash – so well below a return you might expect from equities.”
Should you invest in gold?
Investors considering investing in gold should only do so as part of a diversified portfolio. It’s still important that you invest in other assets like bonds and shares, given that gold offers no return, like dividends or interest.
Gold can perform well in environments when both equities and bonds suffer, most obviously during times of crisis or heightened geopolitical tension.
Streeter said: “Short-term speculating can backfire, even though there will be a temptation to hang onto the coat-tails of the record run upwards. As we’ve seen historically, the metal can dip sharply if geopolitical tensions ease.
“Gold shot up after the terror attacks of 9/11, then lost significant ground in the years that followed. Gold should be viewed as a hedge against potential falls in other asset classes like bonds or stocks. Given that US stock markets had reached record levels before recent losses, and there is concern about a further correction, gold could be considered a sensible medium-term hold as part of a diversified portfolio.”
