The two main purposes of gold investment are to diversify the risk in the investment portfolio and to protect the asset against inflation. The current global situation could not be more amenable to these 2 justifications as the US is dealing with ‘temporary inflation’ and volatile stock and bond yields. According to experts, current inflation is described as ‘temporary’ as it is an effect of the post-pandemic period. So is it really temporary? In this case, what should gold investors do? While Analisdollarser seeks answers to these questions, we Cryptocoin. com, we have compiled their analysis and evaluations for you.
According to the Kitco Gold survey result, uptake among individual investors has increased
Inflation could be under control next year, with the Fed’s tight monetary policy and faster manufacturing growth and job opportunity, according to market analyst Kuntala Sarkar. On the other hand, stock market and treasury yields are rising on the back of the Fed’s strong confidence and hovering around 1.52%. However, the analyst states that an investor should be ready for it, as the stock market can fluctuate again at any time.
Fitch Ratings thinks that the US’s AAA credit rating may come under pressure if the Fed does not address the debt ceiling issue soon. Kuntala Sarkar also says that in this case, gold can emerge as a savior again.
A recent Kitco Gold survey identified respondents’ opinions: on Wall Street, gold is 50% buy and 29% sell and 21% neutral, while the Main Street gold market is 48% buy and 38% sell and 13% neutral. In addition, according to the survey result, purchases among individual investors increased.
Strategist Gold is slowly breaking out from the dollar, according to Ole Hansen
Spot gold price was $1,762 in the last trading of the week, and Comex December futures held $1,758 and above. Kuntala Sarkar says that this upward trend is expected to strengthen in October and the Fed’s comment on monetary policy at its November meeting is expected. Ole Hansen, Head of Commodity Strategy at Saxo Bank, comments on this upward trend in gold and inflation:
Gold is slowly breaking away from the dollar and gaining strength as the inflation story ceases to be temporary.
Asset trading and investing are handled differently. Some experts on gold, platinum and silver trading and investment think:
When trading, you use a method and a plan to enter and exit with strict rules for both. When you invest, you have some rules, but not that strict.
With this in mind, analyst Kuntala Sarkar says that an investor should maintain faith in gold over the long term, as gold prices rose promisingly in early October. But any tapering timing from the Fed will push prices down later this year, according to the analyst.
Christopher Vecchio: So gold fiadollar may fall like a yellow threshold when runes are thawed
The gold price expectations of experts for 2022 are still in the downward direction. So what should investors do? Should they stop buying the asset? According to Kuntala Sarkar, on the contrary, they can invest in the asset class by considering the long-term portfolio. The analyst explains his thinking as follows:
Because even if tapering is in December, this year or early 2022, the Fed will continue to buy government-backed bonds, only the pace will be slower.
Kuntala Sarkar, on the other hand, states that traders may be more strict to stabilize their entry-exit strategies as gold prices will affect them more in the short term. DailyFX Senior Market Strategist Christopher Vecchio comments in a note:
I would expect gold to rise as this crisis escalates, but we’ve been here before, and once these issues are resolved, prices could fall like a threshold.
Saying that Hindollarsi investors should not worry too much about the current uptrend or downtrend, Kuntala Sarkar reminds that India is the second largest gold importer and domestic gold consumption has only increased over time. The analyst states that India’s central bank, RBI, has maintained its faith in the asset class and increased its gold reserves, and therefore, walking along the same line of thinking will help them understand India’s policy on gold.