It is tempting to think that gold represents an objective and unshakable measure of wealth, especially considering the role of metal as an investment throughout civilization. The value of gold rises and falls like any other investment. While gold will almost certainly never gain or lose its relative value as quickly as penny stocks and dot-com initial public offerings, movements in the price of gold can still convey information. Some investors may choose to maintain some exposure to gold in their portfolio to diversify, as a protection against the fall in stocks and bonds.
However, companies that sell gold will be happy to receive their money in return, which should inform you about the short-term forecast for gold and the likelihood of impending inflation. The precious metals analyst at Standard Chartered Bank, Suki Cooper, said that gold is unlikely to fall much from now on, as most downside risks have been taken into account. As technology improves, it is more feasible to extract minerals with lower gold concentrations from an economic point of view. A recession would favor gold prices, but the sharp rise in interest rates used to deal with inflation has so far limited the rise of the precious metal.
While gold usually performs poorly in an environment of rising rates, sometimes that correlation doesn't apply. Lloyd admits that, while Bitcoin and other cryptocurrencies could eventually serve as a hedge against inflation, just like gold, due to their limited supply, the price of Bitcoin is influenced by too many other external factors, such as regulatory concerns, the adoption of companies and the creation of their own digital assets by governments, such as the creation of their own digital assets to consider them a hedge against inflation at this time. But Lloyd points out that cryptocurrencies are a “very speculative asset class”, while gold is a much safer and much less volatile alternative. If you have ever been exposed to a single advertisement on a financial television network, you have been told that gold was, is and will always be, the greatest investment of all time, taking into account its retention of value, its ancient history, its scarcity and other reasons.
Gold prices have fallen to six-week lows and are expected to experience weekly losses for the third consecutive week, but the fall of the yellow metal is limited, as global risks, in particular the recession and the war in Ukraine, could continue to support it. Last week, gold recorded its worst weekly performance in 15 months due to concerns that the Federal Reserve will raise rates sooner than expected. And a key index that tracks the performance of gold mining stocks fell to a more than two-year low.