With gold at new highs, is it still good for investment?

Team Veye | 02-Apr-2023 gold for investment

Gold has always been known as an ultimate safe haven asset. It witnesses a sharp jump at any visible sign of distress or uncertainty. Having excellent resilience, it is sometimes also referred to as a crisis commodity.

Will the metal price continue to climb? Although it gave mixed signals in 2022 for gold investors when the Russia-Ukraine conflict initially started, gold emerged as a hot investment avenue soon.

Gold generally performs well when investors are worried about inflation and foresee risks in the financial system. In trying to be more risk averse, they resort to putting money in gold in the hope that they are getting a return on the investment. 

Gold is considered a standard value for currencies all over the world. The metal normally experiences an uplift when the stock markets go down. It acts as a hedge against inflation. The decline in the value of the dollar drives increases in gold prices.

Gold is also a way of transferring wealth to the next generation, particularly in India and China, where its demand is helping keep the value of gold high.

Gold is one commodity that has given the sustained appreciation in value year after year. It has risen by more than 88% in the past ten years. Its prices are expected to remain in an uptrend in the coming years.

Gold prices globally have been on an uptrend since November 2022 amid stabilizing US retail inflation numbers and anticipation of a less hawkish US Federal Reserve. U.S. spending at retailers falling by more than expected has already taken some pressure off inflation in the near term for Fed to take some quick steps.

The US dollar as well as US bond yields have already begun to cool off, which has been supporting gold. Buying by global central banks and the opening up of Chinese markets can have the potential to positively impact gold demand further.


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