Global investors have once again demonstrated that it is sometimes easier to buy gold than to place faith in stability. In the week ending October 22, inflows into gold ETFs reached an unprecedented $8.7 billion, setting a new historical record. This amount is nearly double that of the previous week. Remarkably, a total of $39 billion has flowed into these funds since the start of autumn.
The reasoning behind this surge is simple. Central banks around the world continue to cut interest rates, which effectively eliminates the last argument against gold — its lack of yield.
According to Bank of America, regulators have implemented rate cuts 313 times over the past 12 months, at a pace not seen since 2010. The Bank of Canada slashed its rate by 175 basis points, the European Central Bank by 150, and the Bank of England by 100. After an 11-month pause, even the Federal Reserve has resumed cuts, bringing the rate down to 4.25%.
In this environment, gold is doing what it does best — gaining value. Since the beginning of the year, the precious metal has skyrocketed by more than 50%, outpacing all traditional investment vehicles. Last Friday, the spot price reached $4,112 per ounce, slightly below Monday’s record of $4,379. However, the market responded calmly to this correction. After such a prolonged rally, even gold needs to catch its breath.
Analysts suggest that the metal still has room for more upside. If the Federal Reserve continues to lower rates and geopolitical tensions remain high, gold could reach $5,000 per ounce next year.
It seems the world is revisiting an age-old rule: when everything around is falling, gold does not soar—it simply stands still while others tumble faster.
