Gold's breaching $2,000 an ounce this year is attributed to its appeal as a safety net for investors, making it a frontrunner against the S&P 500, according to a recent MarketWatch publication.
The unexpected 7 October assault by Hamas’ militant wing on Israel has spurred a 10 percent increase in gold's value. Market specialists foresee that the geopolitical unrest in the Middle East will remain a key driver for rising gold prices.
Brien Lundin, editor of Gold Newsletter, said that the Palestinian-Israeli crisis "sent shock waves around the world - and sent the price of gold soaring".
During tumultuous market periods, investors often gravitate towards gold for its risk-hedging value. Historically, this precious metal has stood as a beacon of safety amid economic downturns, stock market turmoil, international and regional armed conflicts, and pandemics.
Data from the Dow Jones Market indicates that as Thursday's trading concluded, the S&P 500 SPX had notched a 7.8 percent rise since the year's commencement. Concurrently, front-month gold futures marked a 9.2 percent increase in the same period.
Also, Thursday saw October's front-month contract for Gold GC00 futures up by $3.10 per troy ounce, culminating at a high of $1987.20 - a peak not seen since 16 May, according to FactSet figures. This month alone has witnessed a surge of more than 7.5 percent in its value.
Gold's performance in 2022 once again highlighted its standing as a resilient asset. Although its main futures dipped slightly by the year's close, this setback was far less drastic than the S&P 500's 19.4 percent plunge, dividends not included. A similar pattern was evident in 2020, as gold's 24.4 percent boost outshone the S&P 500's 16.3 percent advance.
Findings from the World Gold Council’s study indicate that about 24 percent of central banks globally aim to boost their gold reserves by year-end 2023.
Central banks in emerging markets are increasingly interested in boosting gold reserves, with 71 percent of surveyed respondents expecting a rise in central bank gold holdings this year, up from 61 percent last year. In the previous year, central banks secured a record 1,136 metric tons of gold because of rising interest rates, increased sanctions against Russia, and rising inflation rates.