Gold has long been considered a store of wealth, and the gold price often makes its biggest gains during turbulent times as investors look for cover in this safe-haven asset.
The 21st century has so far been heavily marked by episodes of economic and sociopolitical upheaval. Uncertainty has pushed the precious metal to record highs as market participants seek its perceived security. And each time the gold price rises, there are calls for even higher record-breaking levels.
Gold market gurus from Rob McEwen to Frank Holmes to David Smith have shared eye-popping predictions on the gold price that would intrigue any investor — gold bug or not.
While some have posited that gold may break US$3,000 per ounce and carry on as high as US$4,000 or US$5,000, there are those with hopes that US$8,000 or even US$10,000 gold could become a reality.
These impressive price predictions have investors asking, “What was the highest price for gold?” The answer to that question is revealed below. And by looking at how the gold price has moved historically, it’s possible to understand what that means for the yellow metal in the future.
How is gold traded?
Before discovering what the highest gold price ever was, it’s worth looking at how the precious metal is traded. Knowing the mechanics behind gold’s historical moves can help illuminate why and how its price changes.
Gold bullion is traded in dollars and cents per ounce, with activity taking place worldwide at all hours, resulting in a live price for the metal. Investors trade gold in major commodities markets such as New York, London, Tokyo and Hong Kong. London is seen as the center of physical precious metals trading, including for silver. The COMEX division of the New York Mercantile Exchange is home to most paper trading.
There are many popular ways to invest in gold. The first is through purchasing gold bullion products such as bullion bars, bullion coins and rounds. Physical gold is sold on the spot market, meaning that buyers pay a specific price per ounce for the metal and then have it delivered. In some parts of the world, such as India, buying gold in the form of jewelry is the largest and most traditional route to investing in gold.
Another path to gold investment is paper trading, which is done through the gold futures market. Participants enter into gold futures contracts for the delivery of gold in the future at an agreed-upon price. In such contracts, two positions can be taken: a long position under which delivery of the metal is accepted or a short position to provide delivery of the metal. Paper trading as a means to invest in gold can provide investors with the flexibility to liquidate assets that aren’t available to those who possess physical gold bullion.
One significant long-term advantage of trading in the paper market is that investors can benefit from gold’s safe-haven status without needing to store it. Furthermore, gold futures trading can offer more financial leverage in that it requires less capital than trading in the physical market.
Interestingly, investors can also purchase physical gold via the futures market, but the process is complicated and lengthy and comes with a large investment and additional costs.
Aside from those options, market participants can invest in gold through exchange-traded funds (ETFs). Investing in a gold ETF is similar to trading a gold stock on an exchange, and there are numerous gold ETF options to choose from. For instance, some ETFs focus solely on physical gold bullion, while others focus on gold futures contracts. Other gold ETFs center on gold-mining stocks or follow the gold spot price.
It is important to understand that you will not own any physical gold when investing in an ETF — in general, even a gold ETF that tracks physical gold cannot be redeemed for tangible metal.
What is the historical price of gold?
Gold hit US$2,152.30, its highest price at the time of this writing, on December 4, 2023, on rising expectations that the US Federal Reserve will soon begin to reverse course on interest rates. Fears of a looming recession — or the strong belief that a recession is already here — are also highly supportive for gold heading into 2024.
Gold’s first breach of the significant US$2,000 price level in mid-2020 was due in large part to economic uncertainty caused by the COVID-19 pandemic. To break through that barrier and reach what was then a record high, the yellow metal added more than US$500, or 32 percent, to its value in the first eight months of 2020.
The gold price neared that level again in early 2022 as Russia’s invasion of Ukraine collided with rising inflation around the world, increasing the allure of safe-haven assets. In 2023, continued inflation and subsequent rate hikes from the Fed threatened the possibility of a recession, once again pushing gold above US$2,000 and even putting it in sight of its then all-time high. The evolving banking crisis in the spring of 2023 and the outbreak of the Israel-Hamas war in October also placed upward pressure on gold, allowing it to test its previous all-time high.
Gold price chart, January 2000 to December 2023.
Gold price chart via Kitco.
Despite these recent runs, gold has seen its share of both peaks and troughs over the last decade. Rising as high as US$1,920 per ounce in late 2011, the metal took a deep dive halfway through 2013, dropping to about US$1,220. It then remained between US$1,100 and US$1,300 from 2014 to early 2019. However, in the second half of 2019, a softer US dollar, rising geopolitical issues and a slowdown in economic growth pushed gold above US$1,500.
What’s next for the gold price? That’s never an easy call to make. But there are catalysts investors can watch out for.
Aside from the Fed, inflation and geopolitical events, experts will be looking for cues from factors like supply and demand. In terms of supply, the world’s five top gold producers are China, Australia, Russia, Canada and the US. The consensus in the gold market is that major miners have not spent enough on gold exploration in recent years. Gold mine production has been flat for the last five years, at around 3,200 to 3,300 metric tons each year.
On the demand side, China and India are the biggest buyers of physical gold, and are in a perpetual fight for the title of world’s largest gold consumer. That said, it’s worth noting that the last few years have brought a big rebound in central bank gold buying, which dropped to a record low in 2020, but reached a 55 year high of 1,136 metric tons in 2022.
The World Gold Council has reported that central bank gold purchases in the first three quarters of 2023 came to 800 metric tons, or 14 percent higher than the same period last year. At this rate, central bank gold buying is on track for another record year in 2023.
“We think that gold has entered into a new phase of this bull market,” Adam Rozencwajg, managing partner at Goehring & Rozencwajg, told the Investing News Network in a June interview. “It probably started in the third and fourth quarter of last year, and it really revolves around central banks’ behavior as much as anything else. I think it’s going to propel gold much much higher in this leg of the bull market.”
Should you beware of gold price manipulation?
As a final note on the price of gold and buying gold bullion, it’s important for investors to be aware that gold price manipulation is a hot topic in the industry.
In 2011, when gold hit what was then a record high, it dropped swiftly in just a few short years. This decline after three years of impressive gains led many in the gold sector to cry foul and point to manipulation. Early in 2015, 10 banks were hit in a US probe on precious metals manipulation. Evidence provided by Deutsche Bank (NYSE:DB) showed “smoking gun” proof that UBS Group (NYSE:UBS), HSBC Holdings (NYSE:HSBC), the Bank of Nova Scotia (NYSE:BNS) and other firms were involved in rigging gold and silver rates in the market from 2007 to 2013.
Not long after, the long-running London gold fix was replaced by the LBMA gold price in a bid to increase gold price transparency. The twice-a-day process, operated by the ICE Benchmark Administration, still involves a variety of banks collaborating to set the gold price, but the system is now electronic.
Still, manipulation has by no means been eradicated, as a 2020 fine on JPMorgan (NYSE:JPM) shows. The next year, chat logs were released in a spoofing trial for two former precious metals traders from the Bank of America’s (NYSE:BAC) Merrill Lynch unit. They show a trader bragging about how easy it is to manipulate the gold price.
Gold market participants have consistently spoken out about manipulation. In mid-2020, Chris Marcus, founder of Arcadia Economics and author of the book “The Big Silver Short,” said that when gold fell back below the US$2,000 mark after hitting close to US$2,070, he saw similarities to what happened with the gold price in 2011.
Marcus has been following the gold and silver markets with a focus specifically on price manipulation for nearly a decade. His advice? “Trust your gut. I believe we’re witnessing the ultimate ’emperor’s really naked’ moment. This isn’t complex financial analysis. Sometimes I think of it as the greatest hypnotic thought experiment in history.”
Investor takeaway
While we have the answer to the question “What was the highest price for gold?” as of now, it remains to be seen if the yellow metal can reach as high as US$5,000, US$8,000 or even US$10,000.
Even so, many market participants believe gold is a must have in any investment profile, and there is little doubt investors will continue to see gold price action making headlines this year and beyond.
FAQs for the gold price
What affects the gold price?
There are many factors that affect the gold price, but some of the most prevalent long-term drivers include economic expansion, market risk, opportunity cost and momentum.
Economic expansion is one of the primary gold price contributors as it facilitates demand growth in several categories, including jewelry, technology and investment. As the World Gold Council explains, “This is particularly true in developing economies where gold is often used as a luxury item and a means to preserve wealth.”
Market risk is also a prime catalyst for gold values as investors view the precious metal as the “ultimate safe haven,” and a hedge against currency depreciation, inflation and other systemic risks.
What is the relationship between the gold price and the stock market?
Gold has an interesting relationship with the stock market. The two often move in sync during “risk-on periods” when investors are bullish. On the flip side, they tend to become inversely correlated in times of volatility.
According to the World Gold Council, gold’s ability to decouple from the stock market during periods of stress makes it “unique amongst most hedges in the marketplace.” It is often during these times that gold outperforms the stock market. For that reason, it is often used as a portfolio diversifier to hedge against uncertainty.
Does the gold price always go up during a recession?
Gold is considered a hedge against uncertainty, meaning investors often turn to the yellow metal in times of volatility. The precious metal has historically performed well during recessionary periods because it is a store of wealth.
Gold’s global allure provides it with massive liquidity while allowing it to retain its purchasing power in the long term. All of these factors provide support to the precious metal during recessions. However, the gold price is known to dip slightly at the beginning of an economic downturn before recovering and trending higher.
This is an updated version of an article first published by the Investing News Network in 2020.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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