Why gold prices may rise this September

There's no question that gold's unique investing benefits have always attracted a certain level of interest from investors. After all, gold offers unparalleled perks as an investment vehicle, from acting as a safe haven for investors' wealth to providing a hedge against inflation. The right gold allocation can also help protect investors' portfolios against losses from other types of assets, so there's often significant value in adding it to your asset mix.  

But while gold has long been worth considering for investors, a surprising surge in gold prices over the last few months has catapulted it into the spotlight, drawing sustained attention from both seasoned investors and beginners alike. This trend first started on March 8, when the price of gold hit its first record of the year. One month later, gold had shattered that record — and then did so again in late May and mid-August, when it reached an unprecedented $2,525 per ounce. 

While the price of gold has moderated a bit in the time since, it's still just a few dollars under its most recent record high — despite a cooling inflationary environment that would typically lead to a downturn in gold prices. And as we close in on September, we may see gold's bullish run continue. Below, we'll detail why.

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Why gold prices may rise in September

Here's why we might see gold prices continue to climb in the coming month:

Central banks are buying in

One of the most significant drivers of gold's price surge has been the aggressive purchasing by central banks worldwide. This trend shows no signs of slowing down, either, as many countries seek to diversify their reserves away from traditional currencies. The sustained demand from these institutional buyers provides a solid foundation for continued price appreciation and is likely to play a role in gold's price trajectory over the next month.

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Economic and geopolitical uncertainty is looming

The global economic landscape remains fraught with uncertainty. Lingering inflation concerns, potential recession risks in major economies and ongoing geopolitical tensions have created an environment where gold's safe-haven status becomes increasingly attractive. As investors seek to hedge against these risks, demand for gold is likely to remain strong, potentially pushing prices higher.

Investor demand remains high

Despite the recent price increases, investor appetite for gold appears undiminished. Many view the current price levels not as a deterrent but as confirmation of gold's value proposition — and an opportunity to buy in and potentially turn a profit quicker than normal. This sustained demand from both retail and institutional investors could continue to support higher prices in September and beyond.

There's an expanding industrial demand

While investment demand often dominates discussions about gold prices, it's important not to overlook the metal's growing industrial uses. As technology advances, gold's unique properties make it increasingly valuable in various applications, from electronics to healthcare. This expanding industrial demand adds another layer of support to gold prices.

The industrial applications for gold are particularly noteworthy. As industries continue to innovate, the demand for gold in technological applications is likely to increase, potentially supporting higher prices in the long term. For example, gold's excellent conductivity, resistance to corrosion and malleability make it an ideal component in many high-tech devices, from smartphones to advanced medical equipment.

Supply growth is limited

The supply side of the gold market also plays a crucial role in price dynamics. Factors such as limited new gold discoveries and the increasing challenges and costs associated with extraction could contribute to sustained price appreciation in the long term. As easily accessible gold deposits become scarcer, the cost of production rises, potentially setting a higher floor for gold prices.

The bottom line

While the price of gold has moderated slightly from its recent record high, it remains within striking distance of that peak. As we move into September, the confluence of these factors — central bank buying, economic uncertainty, sustained investor demand, growing industrial uses and supply constraints — creates a compelling case for continued strength in gold prices. However, it's crucial to remember that the gold market, like all financial markets, is subject to volatility and influenced by a complex interplay of factors. So while the outlook for gold in September appears positive, you should always consider your unique financial goals and risk tolerance when making investment decisions.