Gold has always divided opinion. Some investors swear by it as a hedge against inflation and global uncertainty, while others avoid it altogether. But regardless of where you stand, one thing is clear: the gold price in Australia has hit record highs, now sitting above $ 5149.21 per ounce.
So, what’s behind the recent rally—and is it likely to continue?
Strong Global Demand Is Boosting Gold
One key driver of the gold price surge is strong demand from emerging market central banks, especially in Asia. After seeing Russia’s rouble frozen out of the global financial system, other countries have turned to gold as a safer alternative to holding foreign reserves—particularly US dollars and Treasuries.
This kind of long-term buying is significant. Unlike short-term traders, central banks aren’t swayed by daily price swings. As one fund manager put it, this “puts a floor” under the gold price, providing lasting support.
US Dollar Weakness and Deficit Fears
Traditionally, gold competes with US government bonds as a safe-haven investment. But lately, investors have been wary of US debt. Concerns about the size of the US fiscal deficit, and the government’s ongoing need to issue more bonds, are creating uncertainty in global markets.
This is good news for gold. When faith in traditional safe havens like bonds weakens, gold often becomes more attractive. And while rising interest rates usually dampen gold prices—since gold doesn’t pay interest—this time around, it hasn’t happened.
In fact, gold has risen alongside bond yields, a sign that something bigger may be at play.
Are Gold Miners Being Left Behind?
Interestingly, gold mining shares haven’t kept pace with the gold price. Fund managers say mining stocks, especially small-cap explorers, remain undervalued. Part of the reason is that many retail investors in the US—who used to back gold miners—have now shifted focus to cryptocurrencies.
There’s now a disconnect: physical gold is in demand, especially in Asia, but mining companies are trading at discounted valuations, reflecting more cautious Western sentiment. This presents a buying opportunity for savvy investors.
Should Australians Consider Gold Right Now?
If you’re wondering how to invest in gold in Australia, there are several options:
- Buy physical gold (bullion, coins, or bars)
- Invest in gold ETFs (exchange-traded funds)
- Buy shares in gold mining companies
- Use a gold savings account or platform
Investment professionals suggest that gold should be viewed as a long-term holding. It’s a reliable hedge in times of inflation, market stress, and geopolitical turmoil. Gold also offers one unique advantage—it’s tangible. Unlike digital assets, you can hold gold in your hand, and its supply is finite.
Final Word: Is It Too Late to Buy Gold?
While some might fear that gold has peaked, many experts disagree. With central bank demand still strong, ongoing geopolitical risks, and uncertainty around the US economy, the outlook for gold remains positive.
As one investment strategist put it, gold thrives in moments of “schadenfreude”—when markets wobble and uncertainty rises. And with global conditions far from stable, many see gold as a go-to asset for the years ahead.
If you’re looking to diversify your portfolio or hedge against uncertainty, now might be a good time to consider your gold investment strategy in Australia.
