Gold Prices Soar to Record High Amid "Debasement Trade", China's Buying Spree, and AI Bubble Fears

Gold's Price Record Driven by 'Debasement Trade,' China, and AI Bubble Fears, Analysts Say Gold surged to a new record on Tuesday, cresting at over 4,000 per troy ounce, driven by investor fears over government debt, a weaker dollar, a buying spree by China's central bank, and concerns the AI stock boom may collapse. According to analysts, the "debasement trade" – where investors seek safe-haven assets as governments print more money to finance their debts – is a significant factor in gold's price increase. "The debasement trade is real," said Peter Schiff, CEO of Euro Pacific Capital. "When governments print too much money, it erodes the value of currency and drives up the price of gold." China's central bank has been actively buying gold, which has contributed to the price surge. The People's Bank of China (PBOC) has increased its gold reserves by 20% in the past year, making it one of the largest gold-holding central banks in the world. The AI stock boom, which has seen companies like NVIDIA and Alphabet soar to new heights, is also a concern for investors. "We're seeing a bubble form in the AI space," said Michael Saylor, CEO of MicroStrategy. "Investors are getting caught up in the hype, but when it bursts, they'll be left holding worthless paper." The U.S. government shutdown has added to investor uncertainty, making gold an even more attractive safe-haven asset. Background and context: Gold's price has been rising steadily over the past year, driven by a combination of factors including central bank buying, a weaker dollar, and concerns about inflation. The metal has broken through several resistance levels in recent months, leading some analysts to predict further gains. Additional perspectives: "The AI bubble is just one aspect of a broader market correction," said David Rosenberg, chief economist at Gluskin Sheff. "We're seeing a rotation out of tech and into more traditional assets like gold." "Gold is not just a safe-haven asset; it's also a store of value," said Saylor. "As the dollar continues to weaken, investors will turn to gold as a hedge against inflation." Current status and next developments: Gold prices continued to rise on Wednesday morning, sitting at 4,055.30 per troy ounce on Comex. Analysts expect the price to remain high in the short term due to ongoing uncertainty over government debt and the AI bubble. As the U.S. shutdown continues, investors will be closely watching gold prices for signs of further gains or losses. With central banks around the world actively buying gold, it's clear that this safe-haven asset is here to stay. *Reporting by Fortune.*