Record gold price sees value of bars hit $1m for the first time

The price of gold has reached a record high, taking the value of an average bar of the precious metal up to $1m for the first time.

The spot gold price held steady on Wednesday afternoon at $2,500.40 (£1,913.66) per ounce while gold futures (GC=F) fell slightly to $2,536.20 per ounce.

The precious metal reached $2,529.75 per ounce at an auction on Tuesday afternoon, according to the London Bullion Market Association (LBMA).

The London gold price benchmark showed the price of gold topped the $2,500 mark for the first time in its history of over 100 years on Monday morning, settling at $2,500.05 per ounce, taking the value of a standard gold bar to $1m, given that each one weighs 400 ounces on average.

However, Paul Atkinson, executive chairman at Atkinsons Coins & Bullion, told Yahoo Finance UK that the 400-ounce bar is "used almost exclusively for depositing with the Bank of England or the major other bullion banks".

"It is not a bar which is easily tradeable or distributed due to its weight, size and value," he said.

Atkinson said that most retail gold bar sizes are smaller, ranging from one ounce to one kilogram in weight. Anyone interested in buying a gold bar can find prices starting at just under $2,000 for a one ounce bar, as of Wednesday afternoon, while a one kilogram bar costs more than £62,000.

Gold prices have risen as investors await further clues as to when the US Federal Reserve plans to cut interest rates.

The minutes from the Federal Reserve’s July interest rate meeting are due to be released on Wednesday, which investors will pore over for any indication on the central bank’s timeline for cuts.

The main focus for investors this week will be Fed chair Jerome Powell’s speech at annual central banking conference the Jackson Hole Symposium on Friday.

Hopes that the Fed will soon lower its base rate from a 23-year high of 5.3% have been on the rise following recent economic data. A slim majority of economists expect the central bank to announce three rate cuts of 25 basis points by the end of the year, according to a Reuters poll.

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A weaker-than-expected July jobs report sparked recession fears and concerns that the Fed may have been behind the curve on lowering interest rates. A closely watched US inflation report released last week showed that consumer prices rose 2.9% in July, slowing from 3% in June, which added to market bets of an impending rate cut.

The price of gold has risen as the prospect of Fed rate cuts has boosted the appeal of the non-yielding precious metal for investors.

Laith Khalaf, head of investment analysis at investment platform AJ Bell, said: “The economic and geopolitical uncertainty of recent years has helped propel gold upwards. But it’s actually been central banks behind the buying action, with gold ETFs (exchange-traded funds) seeing a number of years of outflows.”

He added that “central banks have been attracted to gold because it’s liquid, carries no credit risk, and is free from any geopolitical interference.”

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According to data provided by AJ Bell, the iShares Physical Gold ETC (SGLNL.XC), an exchange-traded commodity, has generated a real three-year return of 24.8%, beating other assets such as bitcoin (BTC-USD) and a global index tracker, when referring to the Fidelity Index World tracker.

UBS analysts predicted that gold prices could reach $2,600 per ounce by the end of 2024.

"As ever gold remains worthy of consideration as a portfolio diversifier because it behaves differently to other asset classes, but it shouldn’t make up more than 5% to 10% of your portfolio at most," said Khalaf.

"While gold is known as a safe haven, it is volatile, and despite having a reputation for being an inflation hedge, it has endured long periods of below inflation returns.”

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