Higher return for gold - relative to the S&P 500, over the past five years

The price of gold has performed solidly in recent years, and especially in 2024, as persistent inflation and multiple wars fueled demand for the precious metal, pushing futures to a new all-time high of over $2,400 an ounce. .

Gold is considered a unique asset due to its enduring value, historical significance, and use in various products and technologies, such as computers, spacecraft, communications equipment. Considered a safe "safe haven" asset, gold is preferred by investors to protect themselves in times of global uncertainty and economic decline.

An analysis published by visualcapitalist.com shows that, over the past five years, gold has outperformed the US stock index S&P 500. During the said period, the price of gold has risen by 81.65%, and the S&P 500 by 76.22%. In the past year, the yellow metal has appreciated by 16.35%, while the S&P 500 index has recorded an advance of 25.21%.

A sign of the scale of gold demand is that US retail giant Costco sells up to $200 million worth of gold bullion every month in the United States, the source said. In the previous year, profile sales amounted to just $100 million per quarter.

But consumers are not the only ones buying gold. Central banks around the world have been hoarding very large amounts of gold, presumably as a hedge against inflation. According to the World Gold Council (WGC), these institutions bought 1,136 tonnes of gold in 2022, marking the highest level since 1950. Figures for 2023 show purchases of 1,037 tonnes.

Yesterday, gold futures for June delivery fell by 0.1% on the US Comex exchange, reaching $2,405.20/ounce at 07:15 local time. The spot price was at $2,387.88/ounce, up 0.2%.

The positive outlook for gold is supported by a number of major investment banks. Among them, JPMorgan Chase & Co. estimated, last month, that the price of an ounce of gold could reach 2,500 dollars this year. Also, analysts from Goldman Sachs Group Inc. they anticipated that the price of gold would exceed $2,300 an ounce.

According to Goldman Sachs, commodity prices will rise this year as central banks in the US and Europe cut interest rates, helping to support industrial and consumer demand. The quoted source shows that the price of copper, aluminum, gold and petroleum products could increase, and investors must be selective in this context, because gains will not be universal.

Economist David Rosenberg, president of Rosenberg Research, believes that the price of the yellow metal can still increase by almost 30%, up to 3,000 dollars per ounce, before the next change in the economic cycle. He recently stated, quoted by Business Insider: "The increase in the price of gold came at a time of appreciation of the dollar, of a decrease in inflationary expectations and at a time when the US Federal Reserve created in the market the expectation that it would maintain interest rates raised for a longer period. All this would normally have affected the price of gold, but the precious metal continued to rise."

Since the beginning of the year, the price of gold has registered a gain of about 14%.