Despite everything in the market, the gold price continues to maintain its position. The dollar index is above 100 points, which is a negative situation for gold. On the other hand, the exit of the S&P 500 from the bear market region, the fact that the two-year bond yields are above 4.5% and the money market funds are above 5% again indicate a negative situation for gold. However, the yellow metal continues to find solid support in a solid and bullish streak. Moreover, it does this at a time when cryptocurrencies are experiencing significant decreases.
Where is the direction for gold
Some analysts state that gold prices should be significantly lower under current market conditions. According to them, gold should trade at $1,800. However, there is an interesting situation for the price of gold. Gold is less than 6% away from hitting its all-time high. So what makes this environment so different? Central banks’ demand for yellow metal fundamentally changed the market dynamic. Central banks are not the only net buyers of gold because of their voracious appetites. He is also a record holder. This demand is not going anywhere anytime soon.
Let’s just look at the People’s Bank of China, which this week reported purchasing about 16 tons of gold last month. This is the seventh month in a row that the People’s Bank of China has purchased gold. It has increased its gold reserves by 144 tons since November. China does not buy alone; Analysts at JPMorgan say gold’s role in foreign reserves is further evidence of the ongoing trend of global de-dollarization. The biggest winner seems to be the yellow metal. In the report, analysts note that the share of the US dollar in global foreign exchange reserves fell to a record low of 58%. At the same time, the yellow metal now accounts for 15% of global reserves, up from 11% five years ago.
Highlights for yellow metal
The role of the US dollar as the world’s reserve currency remains solid. However, some investors are starting to notice the stable performance of gold. This week, the world’s largest asset management firm advised investors to consider making a tactical allocation to gold. “Golden is having a moment,” BlackRock analysts said in the report. We believe this will continue.”
Meanwhile, Jeffrey Gundlach, CEO of DoubleLine Capital and billionaire bond investor, said in his latest webinar that he loves gold as “real money” as the US economy approaches recession. Gundlach said, “I love gold only because it’s real money. But I don’t like commodities. I haven’t liked them for a year. Because the economy is weakening. We will probably enter a recession soon. Commodity prices will not rise during the recession.” says. Of course, while gold is gaining new traction, the market is at the mercy of the Federal Reserve. Many analysts have said that gold’s true potential will be revealed once the Federal Reserve definitively stops its tightening cycle. The Central Bank will meet next week and is expected to keep interest rates unchanged, while maintaining its hawkish trend. While there is a sharp correction in stocks, it is also a matter of time before gold reaches record levels. For now, investors need to sit back and wait. cryptocoin.com When we look at it as a whole, yes, gold prices can still decrease. But for many, every fix is seen as a buying opportunity.
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