* Finance Feeds: speculation of an increase in the value of the yellow metal in the long term
* The best time to buy is when the economy is in the midst of a recession
The price of gold reached its highest rate in history on March 8, 2022, at about $2,070, due to the steady increase in prices, amid investor concerns about the military conflict in Eastern Europe. Since then, in October of the same year, gold lost about 15% of its value, reaching $1,615. And then he recently recovered.
The majority of investors are looking forward to monitoring and following the price of gold in the last quarter of 2022 and the beginning of 2023, due to the other important factors and motives that it entails, such as geopolitical concerns, the strength of the US dollar, inflation, interest rates in central banks, and the possibility of a recession in major economies in the future. near.
recession risks
High inflation at a continuous pace represents a great danger and threat to any economy, as it can witness high jumps during that stage. In this case, central banks will be forced to take harsh economic policies, with which they risk entering the country’s economy into a state of recession.
Meanwhile, many economists expect that during the year 2023, major economies will turn into recession. In this regard, economists compare the yields of US two-year and US 10-year bonds. However, starting from November 2022, the ratio declined to reach its lowest rate, which is 1981. This means that short-term investments are more risky to the markets than their long-term counterparts.
And in the event of a recession in the country, it will result in an outflow of capital from risky assets such as stocks and cryptocurrencies, to move to safe havens such as gold and the dollar.
Best time to buy gold
FinanceFeeds indicated that the value of gold is likely to increase in the long term. The best time to buy gold is when the economy is in the midst of a recession. Forcing central banks to adopt reverse policies, and to adopt low interest rates that support the country’s economies while providing cash liquidity. In this case, individuals will have money and they will be able to buy gold, which will result in an increase in the price of the yellow metal and its recovery again.
It is usually seen that higher interest rates negatively affect the value of gold as a non-profit asset. While high inflation is a positive factor for the value of gold, according to what it represents as a hedge against inflation. And until inflation decreases, the value of gold will continue to fluctuate in a wide range, affected by strict central bank policies and high inflation rates.
One of the biggest factors affecting the rise in gold prices is the monetary policy of major banks, in addition to the geopolitical factors in the country. In the event of any military conflict, the yellow metal will witness a strong push in the short term, to settle at the 2050 level.
However, central banks must begin to support economies in order to achieve sustainable growth in the long term. For the time being, lawmakers are working towards one goal, which is to combat inflation. Until this happens, banks will be forced to raise interest rates and reduce balances, putting pressure on the price of gold even more. Until the regulators change their monetary policy, the value of gold will see an upward momentum in its value.