World Bank analysts expect gold prices to hover around $1,900 on average throughout the year. According to Adam Button, chief currency analyst and executive editor of Forexlive.com, reports of the dollar’s demise are exaggerated. But Button advises gold investors to look at the precious metal in terms of other currencies.
Analysts expect gold price to remain high
According to the latest report by the World Bank, commodity prices experienced the biggest drop since peaking in June 2022. At the same time, the international central bank added that despite falling 32% from last year’s peak, commodity prices are expected to remain above pre-pandemic levels, raising concerns over affordability and food security.
cryptocoin.comDownside risks to commodity prices continue to be tighter monetary policies around the world as central banks continue to grapple with persistent inflation threats. Analysts say that commodity prices, which are above pre-pandemic levels, are expected to affect inflation. He also notes that this could lead to a further slowdown in growth.
The World Bank says precious metals will remain an attractive asset in a world full of uncertainty. Analysts say they expect precious metal prices to rise 6% this year, outperforming the commodity market in general. World Bank analysts state that gold led the industry with a 9% increase in the first three months of the year. Analysts expect gold prices to hover around $1,900 on average throughout the year.
Mcentral bank demand will provide even more impetus for gold this year.but
The World Bank says safe-haven demand will continue to support gold for the rest of the year, even if the Federal Reserve continues its aggressive monetary policies and other central banks continue to raise interest rates. Based on this, they make the following assessment:
Increases in central bank policy rates since 2022 have limited prices by raising the opportunity cost of gold. However, the recent divergence of movements in gold prices and 10-year Treasury Inflation-Protected Securities (TIPS) returns indicates that the impact of geopolitical and economic uncertainty on prices is stronger than the opportunity cost effect.
The World Bank points to unprecedented central bank demand. He says that demand will likely provide even more impetus for gold this year.
Gold investors should look at gold in other currencies!
According to Adam Button, reports of the dollar’s death are an exaggeration. But gold investors need to look at the precious metal in terms of other currencies. “We see a concerted effort among other countries to move away from the dollar,” Button said. But what you’re seeing is how dominant the dollar is, and a real lack of alternatives,” he says.
Button says it’s too early to talk about the fall of the US dollar and the rise of a new BRICS currency. In this context, “There is an industry that wants the death of the dollar. This industry has revived in the past few weeks. I think a lot of people try to run ahead, anticipating that this weakness is coming,” he explains. Button also believes that gold and other commodities investors have a pricing problem if they only look at USD terms. So, he advises:
I think there are many reasons to look at gold in terms of other currencies. It’s probably not talked about enough. If you have held gold in Yen, Euro or Sterling in recent years, you have done very well. Protected your purchasing power. If you look at what is the best asset I can have in terms of my own currency or the moves I can make, you’ll start to see that a slightly different story unfolds with most of these assets.
Most of the money is sitting on the sidelines waiting for it!
Button says markets tend to be overly focused on the US domestic economy. However, most of the debt in the world is made in dollars. Therefore, he states that the strength and weakness of the dollar can have a major impact on emerging economies. Button states that most of the money that will trigger growth is sitting on the sidelines waiting for a recession discount. Based on this, he makes the following statement:
Right now, many market participants are saying, ‘I’m waiting for a recession to buy gold or stocks. I just want to see things go down 10, 20 or 30 percent,” he says. But getting out of the other side of it would be a much better and long-lasting trade.
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