Global demand for gold increased by 18% in 2022, with central bank purchases concentrated in the second half of the year. In contrast, global supply only increased by 2%. The price of gold is supported by demand and is trading around $1,925 per ounce. Experts predict that the price will continue to rise to reach new records.
The price of gold has experienced a strong increase since September 2022 due to the current geopolitical situation and demand for the yellow metal from emerging market central banks. Although gold does not yield dividends or gains related to rising interest rates, it remains a safe-haven asset during times of economic or geopolitical tension.
Although gold may be considered a store of value, it has no intrinsic value and generates no profit. Wealth only comes from the production of goods and services that can be exchanged for money. Holding gold earns nothing unless it is sold for a profit. Market cycles can be deceiving, and it is important to consider gold prices to determine if one is gaining or losing wealth. Investors must be cautious when considering buying gold and understand that it is speculation rather than an investment.
Gold is considered a safe-haven asset in times of crisis.
However, in recent years, its status has been questioned due to increased volatility in financial markets and the emergence of new asset classes. In 2022, gold was relatively dull as an investment due to low inflation and stagnant stock markets. Gold is considered a safe-haven asset during times of economic and geopolitical uncertainty, and this was true during the Covid-19 pandemic. Since the beginning of the health crisis, investors have sought to secure their savings by buying gold. This has led to a resurgence in investments in precious metals, reaching a level never seen before.
Although gold was not a preferred investment in 2022, it is possible that it will regain its status as a safe-haven asset in 2023. Persistent risks related to inflation, geopolitics, and monetary policy could encourage investors to turn to more stable and safer assets. Gold should be at $2000 already. We’ve printed 3 trillion in the past 2 years interest rates are high and we’re on the brink of war. WTH is going on. I hate how gold is manipulated. No wonder Bricss wants to get away from the dollar. The US manipulates the dollar. And what’s up with silver? Should be at $35-$40
However, in 2023, there are several reasons why gold could rise again.
First, there is the issue of inflation. Although inflation slowed down in late 2022, it is possible that it will pick up again in 2023. This could be due to several factors, including a stronger-than-expected economic recovery, bottlenecks in supply chains, or more accommodative monetary policy.
In addition, geopolitical conflicts are still a source of uncertainty for financial markets. The persistent crisis in Europe, in particular, is a source of concern for investors. Trade tensions and conflicts between major economic powers could also fuel uncertainty in financial markets and drive up the price of gold.
Monetary policy is also an important factor to consider.
While many countries raised interest rates in 2022 to control inflation, it is possible that this policy will be reversed in 2023. If central banks decide to keep interest rates low, this could encourage investors to seek safer and more stable alternatives, such as gold.
CHART SUGGESTS FLAT MARKET IN NEAR FUTURE.
In a recent interview, Carter Worth, founder and CEO of Worth Charting, provided insights on the current state of the market. While many investors are looking for a clear direction, Worth suggests that the market will likely remain flat in the near future. Worth warns against relying on three-year price targets, noting that looking six to nine months ahead provides a more accurate prediction. He believes that the market will likely trend sideways down, with the Dow capturing the overall sentiment.
Despite consumer discretionary stocks performing well this year, Worth points out that the real winners have been the Philadelphia Semiconductors, Oil Services Index, and Gold and Silver Index. Additionally, while he remains negative on equities as a whole, he sees potential in Tesla, predicting a bounce to 155 or higher.
Worth also recommends considering gold as a hedge against any potential market contraction. He believes that it should always be a part of a well-diversified portfolio. While there are interesting developments in the market, Worth suggests that investors should be cautious and avoid being swayed by short-term rebounds. Instead, focusing on the long-term trends can help them make more informed decisions.