The price of gold passed yet another new benchmark Friday—topping $2,700 an ounce for the first time ever.

At press time Monday, the yellow metal’s spot price was $2,723 an ounce.

The new milestone comes less than a month after gold passed $2,600 for the first time, and less than two months after it first hit $2,500.

At the beginning of the year, its price was $2,063 an ounce.

Analysts cited mostly familiar reasons for gold’s staggering run, such as the desire for a “safe haven” in the face of geopolitical turmoil (including the U.S. presidential election). But they also noted that sovereign banks, particularly China’s, are bulking up their gold assets.

“China saw what happened to Russia, where the dollar was used as a weapon,” Campbell Harvey, a professor at Duke’s Fuqua School of Business, tells JCK. “Given China’s geopolitical ambitions, it makes sense to exercise some risk management.… For China to de-dollarize, they need to find another safe asset.

“A logical choice for that safe asset is gold. As such, China has been increasing their official gold reserves. Expectation that they will continue to do this drives the price of gold up. Simple supply-and-demand economics. Supply is limited; the demand increases, and price increases.”

Jim Wyckoff, a senior metals analyst at Kitco, tells JCK that the Federal Reserve’s Sept. 18 decision to cut interest rates half a point, followed by the European Central Bank lowering its rates, added fuel to an already raging fire. Lower interest rates have historically been bullish for gold prices.

Still, Wyckoff says this is a “very mature bull market in gold,” which could signal that it’s “close to the top.”

“Right now the charts are still favoring more upside price potential,” he says. “The price of gold will peak out some time, and more suddenly than people expect.”

Wyckoff does think gold will eventually hit $3,000 an ounce—he just doesn’t know when.

“At some point in the next decade, I can confidentially say that gold prices are likely to top $3,000,” he says.

Adds Harvey: “Gold is a volatile asset. Its volatility is about the same as the S&P 500, about 15% per year. That means the price can go up or down dramatically. It is naive to think that just because the gold price has moved up over the last six months, it will continue to move up.”

(Photo: Getty Images)

Follow JCK on Instagram: @jckmagazine
Follow JCK on Twitter: @jckmagazine
Follow JCK on Facebook: @jckmagazine