Precious metal is back in vogue as investors look for ‘safe havens’ The best way to invest in gold – and when you should The value of gold has hit a new record high as investors seek out safe haven assets ahead of the Budget and ongoing geopolitical uncertainty in the Middle East. The London Bullion Market Association (LBMA) gold price rose to $2,083.15 (£1,642.96) per ounce on Monday morning, surpassing the previous record of $2,078.40 set at the end of December.
The association provides the global benchmark price for unallocated gold delivered in London, the biggest gold trading centre in the world. Analysts do not think there is one reason for the record highs but investors have been buying up the precious metal amid heightened tensions in the Middle East and the threat of inflation caused by the shipping crisis in the Red Sea. Gold started the year at $2,074.90 an ounce and besides three days in mid-February, the price of gold has not dropped below $2,000 an ounce.
At times of economic uncertainty traders rush to buy gold, which offers stability and diversification to portfolios. The metal is considered a safety net against inflation, and its price has risen gradually since the cost of living began to soar. Traders are also putting their money into gold as the Chancellor prepares to unveil his Budget on Wednesday, as Jeremy Hunt scrambles to find room to announce pre-election tax cuts.
Global central banks bought a net 800 metric tons of gold in the year to September, as markets price in aggressive interest rate cuts next year. Traders are betting there is a 59pc chance of a US interest rate cut as early as March, up from 20pc a week ago. But if you want to stabilise your holdings with gold, what do you need to be aware of? Let’s take a closer look.
A record number of gold investors Last year it recorded its highest ever number of people investing in gold, up 7pc year-on-year. This was on top of a 26pc increase in the number of gold investments in 2022. Andrew Dickey, the Mint’s director of precious metals, said: “We have continued the development of our smaller, fractional products allowing entry-level investment right up to our six-figure investment options. This has allowed more investors to purchase gold with us.”
By introducing smaller-sized gold coins and bars, known as “fractional products’’, it has lowered the entry point meaning customers can invest in gold from as little as £75. In 2023, it made up 77pc of all investments made at the Royal Mint. Mr Dickey said: “More customers made gold investments last year than during the lockdown investing boom in 2020, highlighting the continued appeal of the asset class.” Research from the World Gold Council has found that during recessions, gold prices typically fare well, delivering positive returns in five out of the last seven downturns.
Andrew Dickey, the Mint’s director of precious metals, said: “At a time when financial markets are more unpredictable, investors are taking active steps to protect their portfolios. From our experience, gold and precious metals grow in popularity during challenging times for the global economy as investors look to diversify their portfolios.”