The price of gold has climbed about 28% since the beginning of the year. Investors typically buy up the precious metal in times of uncertainty, driving up its price.

While the U.S. economy is in a good place right now, geopolitical tensions around the globe have helped push up the price of gold — and so have the actions of some central banks.

Tensions between countries globally the last few years have led more central banks to boost their holdings of gold, according to Joe Cavatoni at the World Gold Council. 

“2022 was a record year. 2023 was a near-record year,” he said.

Things have cooled down a bit this year, but different countries have their reasons for buying more of the precious metal, noted Phillip Streible, chief market strategist at Blue Line Futures.

In some cases, it’s sanctions — like those the U.S. put on Russia after it invaded Ukraine. 

“The different central banks see that there are sanctions with different trading partners, and those currencies had started to depreciate rapidly that they are holding,” Streible said.

Like the central bank in Poland, he added, which needed to get rid of Russian rubles. “So they start to liquidate those, and then they naturally roll it into other things, such as gold.”

However, the biggest driver in this market is China, which is looking to “de-dollarize,” according to Duke University finance professor Campbell Harvey.

“China wants to reduce its dependence upon the dollar just the same way that the U.S. wants to reduce its dependence on foreign chip manufacturers,” he said.

For central banks, gold makes sense as an investment, because it’s held its value long-term, Harvey noted. (As in, over the last 2,000 years, according to his research.) But in the shorter term, it’s more volatile — about the same as stocks in the S&P 500.

“That means there could be very large swings in the value at the wrong time,” Harvey said.

But for central banks and individual investors, gold provides something that stocks or bonds can’t: It’s a real, physical thing, said Jeff Bredthauer at the University of Nebraska – Omaha.

“It’s comforting,” he said. “It’s something you can hold.”

And with an uncertain election ahead in the U.S., wars in the Middle East and Ukraine, and climate disasters around the globe, comfort just seems to make sense.