© REUTERS/Alexander Manzyuk/File photoIngots of 99.99 percent pure gold are placed in a workroom at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, January 31, 2023.
Investors piled into the "safe haven" asset on Tuesday, with the spot price reaching a record $2,141.59 (about £1,685) for an ounce, beating the previous record of $2,135 in December, before easing back again to about $2,128.
Comment: Note the previous record was just a few months ago, and this one was likely brought back down by those powers rigging the markets.
The US Federal Reserve is increasingly expected to cut interest rates - now at 23-year highs - in June. Reductions in borrowing costs typically push gold higher because it does not offer any interest.
The precious metal is also used as a reliable store of value during periods of political and financial uncertainty. It has risen by more than $300 an ounce since the start of the Israel-Hamas war and some analysts believe it could break the $2,300 mark.
Ricardo Evangelista, a senior analyst at ActivTrades, said: "Concerns surrounding global economic prospects, geopolitical tensions, and shifting expectations towards earlier interest rate cuts have fuelled increased demand for the precious metal, leading to its upward price trajectory."
Patrick Farrell, the chief investment officer at Charles Stanley, argued that the gold price would probably soon peak. He said: "It has been a grim year for many commodities. A confluence of weakening economic growth, particularly from China, plus an adjustment after some post-pandemic exuberance, has seen the prices for energy, industrial metals and 'energy transition' commodities such as copper and nickel drop.
"Gold, in contrast, has reached new highs as geopolitical tensions have increased. This situation may be about to reverse."
Farrell said those tensions were now "priced in" to the current gold price, and that returns on other investments were rising, meaning gold would fall.
The pile into gold comes despite a lack of endorsement from one of the world's best-known investors. In a speech at Harvard in 1998, Warren Buffett said gold "gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
Russ Mould, the AJ Bell investment director, noted Buffett's argument, and added: "Unusually, the market is shrugging off the Sage of Omaha's words of wisdom and embracing gold instead."
While commodities such as gas have fallen this year, investors have put funds behind other assets including bitcoin - which has also reached a record, breaking $69,000 on Tuesday - and overseas stock markets, driven by enthusiasm for artificial intelligence. The FTSE 100 has missed out on the rally, as it has few technology stocks.
Comment: With the geopolitical situation escalating at a pace unseen in a century or more, it seems more likely that gold's true value will only continue to rise, which is relatively good news for some nations: