Why are gold prices hitting record highs?

Gold prices have soared more than 30% this year.

The price of gold climbed to an all-time high on Friday as uncertainty about conflict in the Middle East and the U.S. presidential election sent investors in search of a safe haven.

The latest jump is hardly a blip. Gold has soared about 32% since the outset of 2024, outpacing the 23% growth in the S&P 500 and a 28% surge in the tech-heavy Nasdaq over that same period.

The monthslong stretch of strong performance owes in large part to an expectation of lower interest rates at the Federal Reserve, which typically coincide with an increase in gold prices, some analysts told ABC News.

They also pointed to purchases of gold reserves among central banks, as well as persistent demand from investors aiming to diversify their portfolio and hedge against global unrest.

Some analysts cautioned that gold prices often oscillate on a weekly or monthly basis, making it difficult for investors to time the market.

“Gold is at a new record high, but you can rest assured that once it hits its peak it will probably back off of it,” Jim Wyckoff, senior market analyst at Kitco Metals, told ABC News. “Nobody knows when.”

The surge in price has stemmed largely from immense appetite for gold among central banks in recent years, especially from the central bank in China, experts said.

Central banks worldwide purchased more than 1,000 tons of gold during each of the last two years, the World Gold Council found. Before those years, that threshold had never been crossed.

China ranks atop the list of nations seeking to bolster their gold reserves as a means of reducing its dependence on the U.S. dollar. Until May, the People’s Bank of China had purchased gold for 18 consecutive months.

“U.S.-China relations have been strained for quite a while, and it’s been even worse over the past year. It’s a reasonable thing for them to reduce their reliance on the dollar,” Campbell Harvey, a professor at Duke's Fuqua School of Business who studies commodity prices, told ABC News.

“That means you need an alternative and one alternative that’s credible is gold,” Harvey added.

However, central bank purchases of gold slowed in the middle of this year, the World Gold Council said in July. The Chinese central bank has paused its purchases of gold over the past five months.

Still, the gold price continued to soar in recent months as investors grew increasingly confident that the Fed would cut interest rates. Heightened geopolitical uncertainty over that period also made gold an attractive place for safe-haven investment, some experts said.

Last month, the Fed cut interest rates for the first time in more than four years. The chances of an additional quarter-point rate cut next month stand at more than 90%, according to the CME FedWatch Tool, a measure of market sentiment.

Lower interest rates typically coincide with higher gold prices, Trevor Yates, an analyst at investment firm Global X, told ABC News.

“It’s telling what has been behind this rally,” Yates added.

Some experts also attributed the rise in gold prices to geopolitical uncertainty and unease surrounding the coming U.S. presidential election. A perception of global instability often induces investors to purchase gold as means of safeguarding their funds in a millennia-old asset viewed as immune to major swings in global economic performance, they added.

“There’s no strong consensus among the market or the public about which candidate is going to win the election,” Wyckoff said. “That causes uncertainty, and uncertainty usually triggers safe-haven demand for gold.”