Global gold prices have continued to decline, reaching their lowest level in nearly three months, following statements made by the US Federal Reserve President before Congress regarding a potential increase in interest rates early this year. During Thursday’s trading, gold prices fell by 0.2% in spot transactions, reaching $1929.21 an ounce, while the dollar index increased by 0.08%.
The decline in gold prices was influenced by the remarks of Jerome Powell, Chairman of the Federal Reserve, who stated in his testimony before Congress that if the economy continues on its current trajectory, it is highly likely that the interest rate will be increased again. Powell also emphasized that the battle to curb inflation is ongoing and has a long way to go.
Despite the current decline, Ole Hansen, Head of Commodity Strategy at Saxo Bank, believes that the decline in gold prices is temporary. He identified five main factors that support the rise of gold in the medium term, potentially around the beginning of next year. These factors include the continued weakness of the dollar, an economic slowdown that makes current stock market gains unsustainable, and the potential for increased demand for precious metals as a safe haven. Additionally, the continued central banking demand and the possibility of inflation in the United States exceeding the long-term target set by the Federal Reserve contribute to the positive outlook for gold. Hansen also highlighted the high degree of geopolitical changes as a factor that could push gold prices to a new record level above $2100 an ounce by the end of the year.
Taher Morsi, an economist and head of market research at Belun Egypt, added that the tendency of major countries to replace dollar reserves with large reserves of gold due to escalating geopolitical conflicts is another factor supporting the rise of gold. Morsi believes that gold prices could surpass $2080 per ounce before the end of the year.
Despite the current decline, experts remain optimistic about the future of gold prices, citing various factors that could contribute to its rise. However, they also acknowledge that further weakening of the global gold price below $1900 an ounce is relatively unrealistic, and a drop below $1800 an ounce would be required to reach such levels.
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What factors are experts pointing to that could contribute to a potential rebound in gold prices?
Title: Gold Prices Plummet Amidst Rate Hike Speculations, Experts Foresee Potential Rebound
Introduction:
Gold prices have experienced a significant decline, reaching their lowest point in nearly three months. This drop follows statements made by the US Federal Reserve President, Jerome Powell, regarding a potential increase in interest rates early this year. However, experts remain optimistic about the future of gold prices, pointing out several factors that could contribute to a potential rebound.
Price Decline:
During Thursday’s trading, gold prices fell by 0.2% in spot transactions, hitting $1929.21 per ounce. Meanwhile, the dollar index rose by 0.08%. The decline in gold prices was primarily influenced by Powell’s remarks before Congress. Powell emphasized that if the economy maintains its current trajectory, an interest rate hike is highly likely. He also stressed the ongoing battle to address inflation.
Experts’ Outlook:
Despite the current decline, Ole Hansen, Head of Commodity Strategy at Saxo Bank, believes it to be temporary. Hansen identifies five key factors that support a potential rise in gold prices in the medium term, possibly around the beginning of next year. These factors include the weak dollar, an unsustainable economic slowdown, increased demand for safe-haven assets, continued central banking demand, and the possibility of inflation exceeding the Federal Reserve’s target. Hansen even suggests that geopolitical changes could push gold prices above $2100 per ounce by year-end.
Taher Morsi, an economist and head of market research at Belun Egypt, adds another factor supporting the rise of gold – major countries turning towards gold reserves amidst escalating geopolitical conflicts. Morsi predicts that gold prices may surpass $2080 per ounce before the year concludes.
Optimism and Realistic Expectations:
While experts remain optimistic about the future of gold prices, they acknowledge that a further decline below $1900 an ounce is relatively unrealistic. In fact, a drop below $1800 an ounce would be necessary to reach such levels.
Conclusion:
Despite the recent decline in gold prices, experts assert that there are multiple factors that could contribute to a potential rebound. These include a weak dollar, economic slowdown, growing demand for safe-haven assets, geopolitical conflicts, and the possibility of inflation exceeding targets. Individuals interested in trading and investing in Gulf stock exchanges can find more information through the provided link.
“Geopolitical tensions, economic uncertainties, and increased investment demand are all driving factors in the predicted rise of global gold prices in 2022. Investors should consider diversifying their portfolios with this safe-haven asset as a hedge against volatility.”
The global gold prices in 2022 are expected to rise due to several factors, including increasing inflation, geopolitical tensions, and a rise in demand from investors seeking safe haven assets.