Gold has reached unprecedented highs this year, climbing by 27% to its latest record of over $2,635 per ounce. This remarkable rally is largely attributed to recent economic policies by the Federal Reserve and heightened geopolitical tensions, making gold a top choice for investors seeking a safe haven.

Key drivers behind this surge include the Fed’s decision to cut interest rates by half a percentage point, a move that traditionally benefits non-yielding assets like gold. The Federal Reserve’s signals of further, albeit smaller, rate cuts have continued to fuel optimism in the market. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, indicated that these cuts are likely to be gradual but sustained, providing a favorable backdrop for continued investment in gold.

Additionally, ongoing global conflicts, such as the wars in Ukraine and the Middle East, have increased demand for gold as a protective asset. Central banks have been steadily increasing their gold reserves, reinforcing this bullish momentum.

Experts like Michael Cuggino of Permanent Portfolio Family of Funds believe that despite potential short-term fluctuations, the macroeconomic environment is set to sustain gold’s upward trajectory. Hedge funds have placed their largest bullish bets on gold since 2020, signaling strong confidence in the asset’s future.

As traders await further data on U.S. business activity and inflation later this week, gold’s outlook remains optimistic, especially as it continues to benefit from a combination of low interest rates, market volatility, and geopolitical instability.