It was a rather unremarkable day for the S&P/ASX 200 Index (ASX: JXO) and most ASX 200 shares this Tuesday. By the time trading wrapped up, the ASX 200 had advanced by a nervous 0.08%, leaving the index at 7,860.4 points. But it was a very remarkable day indeed for another asset class: gold.
The precious metal hit a major milestone today. Last week, for the first time in recorded history, one ounce of gold rose above the US$3,000 price point. It's one thing to talk about record highs for ASX shares that have, at best, a century of history. But for an asset that has been sought after and valued for thousands of years, it's another thing entirely.
Today, gold extended those gains, reaching as high as US$3,020 an ounce. So, a momentous day indeed for gold and the investors (and companies) that buy, sell, trade, mine, and invest in it.
This rise is reflected in the performance of ASX gold shares this Tuesday. Take Newmont Corporation (ASX: NEM), the largest gold stock on the ASX. It spiked 2.45% today to finish at $74.80 a share.
Vault Minerals Ltd (ASX: VAU) and Genesis Minerals Ltd (ASX: GMD) were also conspicuous winners, both recording gains of more than 2%. But West African Resources Ltd (ASX: WAF) topped the sectors today with a gain of 3.57% to $2.32 a share.
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Why is gold at a new record high?
That's the US$3,020 question. Unlike an ASX share, it can be difficult to determine which factors are causing a commodity like gold to appreciate. All we know for sure is that there are more buyers than sellers, resulting in a higher price.
We do have a lot to speculate about, though.
Gold is traditionally thought of as a 'safe-haven' asset, one that offers wealth protection in the face of inflationary, economic or geopolitical uncertainty.
In uncertain times, investors often flock to gold for these reasons.
As it happens, the global system is experiencing an unusually high level of financial uncertainty. Investors are still reeling from the new Trump administration's whipsawing trade policies.
Trump has threatened a range of countries with new tariffs. In some cases, he has imposed steep tariffs only to walk them back. Markets are now scrambling to assess whether these new policies and the retaliations they may elicit will reignite American inflation and dampen global economic growth.
What's more, tensions are once again flaring up in the Middle East, while the war in Ukraine may or may not be heading for a ceasefire.
Considering all of this, it's arguably no surprise to see investors herding into the 'safety' of gold. Let's see if the yellow metal breaks any more records this week.
