Are Gold Prices Going Up?
As inflation rises, crypto crashes, and more economic uncertainty looms, you may be wondering whether or not gold prices are going up. Whether you’re an investor who wants to know how their gold investment is doing or you’re looking to buy in at a good time, it’s always important to know the price of gold and when it is predicted to go up. Keep reading to learn more about what the experts are saying about gold prices and why gold is such a good investment, no matter what.
What The Experts Are Saying
An article by Kitco states that the U.S. dollar has been inflicting a lot of pain on gold prices over the summer months, forcing gold to wrap up August with the fifth monthly loss. And while the U.S. dollar index traded near 20-year highs on aggressive Federal Reserve rhetoric, December gold futures dropped to below $1,800 an ounce and were last trading at $1,722.50.
However, the good news for gold is that it is not likely to fall much further because most of the downside risk has already been priced in, said Suki Cooper, precious metals analyst at Standard Chartered.
“Although the yellow metal faces significant downside risks, it also benefits from tailwinds including recession risk, a price-responsive physical market, already scaled-back positioning and elevated inflation,” Cooper wrote in a report this week. “The prospect of further rate hikes has quelled investor appetite. While we expect gold to trend lower towards USD 1,700/oz in Q4-2022, these factors are likely to limit the downside.”
Gold’s Forecast for the Future
In the same article by Kitco, looking ahead, Standard Chartered sees the Federal Reserve hiking by only 50 basis points at its upcoming September meeting and then pausing at November and December meetings. This is a slightly more dovish outlook than what markets expect, with the CME FedWatch Tool pricing in a 70.5% chance of a 75-basis-point hike in September.
“Our economists believe the Fed will pause as the U.S. economy is likely to lose momentum in Q4-2022, and that U.S. inflation will start to ease, albeit remaining elevated,” Cooper said. “Fears around slower growth and rising risk of a recession should buffer the downside to gold. For now, gold is largely taking its cue from the USD, with the three-month rolling correlation at -58%.”
In the short term, the gold price will get its direction from macro data, especially the employment report, which will be out on September 2.
“We expect non-farm payroll gains to slow to c.275,000 (from July’s 528,000) and weaker average hourly earnings (AHE) growth of 0.3% m/m (from 0.5%), but see the unemployment rate staying at 3.5%,” Cooper noted.
In the meantime, investors’ ETF exposure reveals less of a commitment to gold, as ETF holders have reduced their exposure over the past four months after the largest inflows in six quarters in the first quarter.
Why Gold is a Good Investment Any Time
It is always a great time to buy gold because it is such an important investment for people to make. With its close correlation to the value of the US Dollar, which consistently loses its value, gold will always hold its value as a long-term investment.
Some of these reasons include:
- Hedge against inflation. As the value of the dollar decreases, so does the value of your savings account. What you have saved today will not be worth the same when you retire. That is why it is important to invest in gold—so that as inflation rises, the value of your savings account stays the same when gold is part of the equation.
- Gold is never valued at zero. In its history, gold has never been valued at zero. It has a strong reputation as being a great investment, and few would dispute this.
- Highly liquid. Need cash quickly? Gold is one of the most liquid investments you could possibly have. It is so easy to buy and sell gold that you will have no problem getting the cash you need quickly. Unlike other investments, such as in small businesses or real estate, where it takes more time to get your money—sometimes years or more.
Start Investing in Gold with Priority Gold
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