gold Hits Record High as Economic fears Rise,Future Remains Uncertain
PRAGUE – The price of gold reached an all-time high for the fourth consecutive day,surging 25% as September to approximately 87,640 Czech crowns per troy ounce (31.1 grams). According to Creditas Bank Chief Economist peter Dufek, this increase is largely driven by investor fear stemming from global uncertainties like geopolitical tensions and inflation.
“I sometimes say that the price of gold is a function of fear,” Dufek explained. “Usually when there is a threat of war or tension or inflation, many investors turn to gold.”
The rising price isn’t solely attributable to fear,though. Dufek notes increased activity from central banks, particularly China’s, in the gold market. China, running substantial trade surpluses, is logically diversifying its holdings away from US dollar-denominated assets. “China has a choice whether to use the accumulated dollars to buy US bonds or something else. So when he partially diversifies into gold, he behaves completely logically and correctly,” Dufek stated.The Czech National Bank has also contributed to demand, purchasing 50 tons of gold for its reserves.
while gold’s historical appeal resurfaced with recent inflationary pressures, Dufek cautions against predicting future price movements. “It’s not like stocks where you can calculate how profitable a company is. With gold, it’s all about demand and concern,” he said. ”It’s part of the portfolio – why not? But it is up to each of us how much we are willing to speculate.”
He further emphasized the difficulty in determining a “essential price” for gold, adding definitively, “No one can say yet whether the price will continue to rise.”
The price of silver is also experiencing an upswing, which Dufek attributes to its broader range of industrial applications, noting it “has a deeper story” than gold. He recalled a similar, though less dramatic, price surge around 1998 when the Czech National Bank was selling its gold reserves.
