Gold hits $2,600 for the first time ever. What’s behind it?

A standard gold bar is now worth more than $1m. Credit: Chris Ratcliffe / Getty images

Gold prices hit the long-awaited $2,500 threshold, maxing out at $2,529.80 an ounce on 20 August, and then surpassing $2,600 an ounce on 20 September, in another all-time record for the precious metal. 

Gold has been one of the highest-performing commodities this year, largely due to expectations that the Federal Reserve would begin cutting interest rates in the US – home to the largest central bank gold reserves in the world. 

Central bank-buying, escalating conflicts and geopolitical risk in mineral-rich areas have also fuelled gold’s year-to-date rise of 21%. 

Many investors view metal as a safe haven because of its ‘intrinsic value’, which would theoretically remain valuable amid wars in Gaza and Ukraine, or in the event of another global financial crash or cyberattacks. 

As gold bars typically weigh 400 troy ounces (12.4kg), a standard gold bar is now worth more than $1m. 

The news comes after months of repeated records. In May, gold prices hit a then all-time high following the death of President Ebrahim Raisi in Iran and illness of King Salman in Saudi Arabia, two mineral-rich nations in a mineral-rich region.

There is scope for gold’s historic highs to continue steadily, financial experts predict. 

In July, JP Morgan upgraded its gold price targets for 2025 and the remainder of 2024, based on a Fed cutting cycle the bank says will commence in November 2024, pushing gold prices to new nominal highs. 

“The direction of travel is still higher over the coming quarters, forecasting an average price of $2,500/oz in the fourth quarter of 2024 and $2,600/oz in 2025, with risk still skewed toward an earlier overshoot,” said Gregory Shearer, head of base and precious metals strategy at JP Morgan. 

When the Fed ended its monetary policy cycle in December, it added to the gold price uptrend, as a weakness in the US dollar makes dollar-denominated metals more affordable for buyers using other currencies. 

Across deep storage vaults at Fort Knox, Denver and West Point, the US government holds 8,134 metric tonnes of gold – more than double the reserves of Germany (3,352 tonnes) and triple the reserves of Italy and France, the next two largest gold-holding countries. 

Gold’s rise has, of course, not just been a story of the US dollar, with significant gold spikes in the Indian rupee, Japanese yen and Chinese yuan. 

Officials from other banks including UBS Group AG and ANZ Group Holdings Ltd also believe gold prices are heading towards $2,700 an ounce by mid-2025. 

Attention will remain fixed on gold’s bull run throughout the rest of the year, particularly in the event of geopolitical tensions subsiding and conflicts abating across Europe and the Middle East.