In 2024, the price of gold has increased by 17%.

Costco is seeing a surge in shoppers purchasing gold bars, but they are not the only ones investing in the precious metal.

On Friday, investors propelled gold prices to a historic peak, marking the latest surge in a 17% rally witnessed thus far in the year. During this timeframe, bullion prices have surged at a rate more than double that of the S&P 500, the index commonly tracked by most people’s 401(k) retirement accounts.

According to some experts interviewed by ABC News, the price gains are attributed to a broader trend wherein investors are actively seeking high-return assets in anticipation of anticipated interest rate cuts later in the year.

Additionally, these experts mentioned that a phenomenon known as a “momentum trade” has contributed to pushing prices higher. Investors observe the upward momentum in the price of gold and are motivated to join in to capitalize on the gains.

Campbell Harvey, a professor at Duke’s Fuqua School of Business who specializes in studying commodity prices, pointed out to ABC News that there’s a notable trend of individuals increasing their risk exposure. He emphasized that the typical price volatility of gold mirrors that of the S&P 500.

Harvey added, “You see things like the S&P 500 going up and bitcoin going up. Gold is part of that.”

Wells Fargo stated in a recent equity research note that Costco has been generating an estimated $100 million to $200 million per month in gold bar sales.

Although the price is not openly disclosed online to non-members, the product generally sells for nearly 2% above the spot price. At the time of publication, the spot price stood at $2,430 per ounce.

UBS noted in a report last week that the buying spree has also extended to central banks. Some central banks are motivated by a desire to reduce their reliance on U.S. dollars and to hedge against inflation risks.

According to UBS, in January and February, central banks acquired approximately 64 metric tons of gold, while China imported 132 metric tons from Switzerland, a key player in gold refining.

Campbell mentioned that hedge funds and other institutional investors have also jumped into the gold frenzy, aiming to profit from the commodity’s rapid ascent. He emphasized, “That institutional pressure is driving up the price of gold.”

Conversely, an Exchange-Traded Fund (ETF) for gold enables individuals to invest in the price movement of the precious metal without the need to purchase, transport, or store the physical commodity.

Harvey pointed out that over the past 10 months, gold ETFs have experienced a net outflow of funds, indicating that, overall, the ETFs are losing investment rather than gaining it. This trend, he added, implies that retail investors are not a significant factor driving the price increase.

Gold is widely regarded as a hedge against geopolitical turmoil because of its status as a millennia-old store of value. It is seen as an investment that could endure calamities and upheavals, offering stability during uncertain times.

“The World Gold Council report highlighted that, in addition to monetary policy, geopolitical uncertainty often significantly influences gold demand, and in 2024, this is expected to have a notable impact on the market,” said the report.

Harvey, however, expressed skepticism about the role of geopolitics in driving the price surge, noting that the rally did not coincide with the outbreak of the Israel-Gaza conflict in October.

Investors seeking to invest in gold have several options available. Apart from purchasing gold bars from retailers such as Costco, they can invest in various gold ETFs or acquire shares in gold mining companies. Additionally, individuals can opt for gold futures, which involve contracts to buy or sell gold on a predetermined date, essentially constituting a speculation on price movements.

However, Harvey cautioned investors to be wary, pointing out that bullion typically yields modest returns following an all-time high. According to a report from UBS last week, the firm anticipates the price of gold to rise to $2,500 by the end of the year.

Harvey cautioned that investing at an all-time high carries significant risk.