Gold reached yet another milestone today, as its spot price surpassed $2,400 an ounce for the first time ever.
This comes less than two weeks after gold crossed the $2,300 mark, and less than a month after it first broached $2,200.
At press time, gold was trading at $2,393 an ounce, after hitting a record $2,429 earlier in the day.
Many analysts said the rally stemmed from the traditional view of gold as a “safe haven” in times of continued political and economic unrest. But they also credited strong buying from central banks, particularly the People’s Bank of China.
“Beijing has been adding to its official gold reserves for the past 14 months, in part to diversify away from dollar assets in light of the recent Russian experience and simmering Sino-U.S. geopolitics,” Asia Society Policy Institute senior fellow Guonan Ma told Newsweek.
Yet this particular surge has come on so fast and strong, even some experts now admit they’re baffled by it.
“The rally is defying a lot of normal thinking, especially when it comes to still-elevated rates,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a Bloomberg story.
One unusual beneficiary of the renewed attention on gold has been the warehouse club Costco, which has been selling one-ounce gold bars with seemingly minimal markup for the past year.
In December, Costco said it had sold $100 million worth of gold bars in the previous three months. But one retail equity analyst, Edward Kelly of Wells Fargo, recently told clients that he believed the gold bar business had grown massively since then and that Costco was selling as much as $200 million in gold bars and silver coins a month. The new category could be adding close to 3% to its general merchandise sales, he noted.
Kelly said that Costco was probably making “minimal profit” on the gold bars, but selling them “reinforces its value proposition.”
(Photo: Getty Images)
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