The continued rise in dollar and US treasury yields, along with the debt ceiling crisis, curbed the upward trend in gold prices, which are moving in a narrow range near $1950 an ounce, after it was at $2000 in the middle of this month.
But the most important question that experts and investors are deliberating is whether it will return. Gold rose again above $ 2,000 an ounce, and is the current time suitable for buying or waiting for more declines in prices?
At the end of Friday’s trading, gold futures rose slightly by 60 cents, to reach $1944.30 an ounce, while recording weekly losses of about 1.9%, which is the third in a row.
Economists confirmed to “Sky News Arabia Economy” that the summer will be hot for gold, whose trading will remain sporadic at many times, but they point out at the same time that reaching $2,000 an ounce again will not be difficult.
Facts and figures
But first, it is necessary to know an important fact, which is that gold is still rising by about 7% in 2023, and about 5% in a full year, despite losing more than 2.2% in a full month, and that the average annual performance of gold reached 9.2% as a return On gold priced in dollars. From 2006 until last year, these returns are excellent by all investment criteria, according to Mazen Salhab, chief market strategist at BDSwiss MENA.
Why did gold fall so strongly in the past month?
In his answer to the important question, will gold return again above the level of $2,000 an ounce, Salhab says in his interview with “Sky News Arabia Economy”: “Before answering this question, an important question must be answered.. Why did gold go? So plummeting last month? And the answer lies in America first and foremost. The answer takes us to the rise in the US personal consumption expenditures index by 4.7% annually, and this means that US inflation continues, and therefore the interest will not decline quickly, on the contrary, it may rise at the meeting next month .. But more importantly, is the rise in short-term returns ( 3, 6, 12 months) on US Treasury bonds, which reached above 5.2%, and thus became higher than US inflation now (inflation is at approximately 4.9%), meaning that returns have become positive, and this is the death of gold, as it is said.
And the chief market strategist at BDSwiss MENA adds: “The last point is that the increase in interest, which makes lending costs high and liquidity decline, may push major investors and even central banks to sell gold in part to obtain easy and quick liquidity, especially after strong buying in the first quarter of the year 2023, and we should not be surprised by such operations, because the liquidation of gold is possible and quickly in markets with high liquidity, such as gold, without resorting to traditional markets.
Gold will not lose ground in 2023
Therefore, it can be said that it will be a hot summer for gold, whose trading will continue to be choppy several times, but reaching again $ 2,000 an ounce will not be difficult (only 2.8 percent) because even if it drops more, the markets will read a rate cut later. of this year.” According to Salhab, who confirmed that gold will not decline strongly and lose all its gains in 2023, except in one case, which is that inflation is declining faster than the rise in interest rates (inflation is weaker and interest remains high), and this does not apply. It is happening now because inflation is not declining quickly.
Salhab believes that the interest-increasing cycle is nearing its end by economic and historical standards. Therefore, care must be taken now not to exaggerate the speed of the decline of the US economy, which may not happen as quickly as many bet.
What is the right time to buy gold?
As for the right time to buy gold, this mainly depends, according to the chief market strategist at BDSwiss MENA, “on each person and his investment objective and the return he wants, as we still see that real gold has a good value (real, tangible assets), especially in economies whose local currency depreciates. And lose value quickly, such as Egypt, Syria, Iraq, Turkey, Lebanon and others. As for the Emirates, which enjoys a strong and stable currency and excellent purchasing power, one can resort to diversifying investment between real gold and investment funds in gold, as well as shares of companies operating in the gold mining sector, which are usually. Giving distributions and medium investments. And in the long run. ”
Salhab concludes that gold remains a good option and should be part of investors’ portfolios in general, because investing in this way will spare investors, especially individuals, the trouble of thinking about the daily price of gold, which is often useless.
For his part, Tariq Al-Rifai, CEO of the Nissab Center for Strategic Studies in London, said: Gold can be bought at any time because the period of investment in gold must be long-term and then it is described as a safe haven, but when you follow gold prices during a year, the price of gold decreases Usually during the summer period, after the price of an ounce reached $2060, it has now fallen to $1946, and we can see a continuation of the decline in prices to around $1800 an ounce, as we noticed investors selling due to the pressures of the US debt ceiling crisis.
