Should You Buy Gold Now?
2023.09.06 07:09
rallied for the second week in a row to settle at around $1940 an ounce.
The growth was fueled by expectations that the Federal Reserve would stop raising rates after signs that the US economy may be slowing.
Released data showed moderate increases in PCE prices and a downward revision to Q2 GDP growth.
US private companies also reduced hiring in August.
Investors are now eagerly awaiting the upcoming US jobs report for more updates on the job market and the broader economic outlook.
The speculation that the Fed may suspend its aggressive stimulus policies has sparked strong investor interest in diversified and safe assets.
Gold is a complex asset that is subject to a variety of market factors. Gold prices can be influenced by many factors such as geopolitics, Chinese or Indian demand for the sector, and global economic conditions.
A FOMC meeting will be held on September 20 to discuss possible interest rate hikes.
Inflation data released on 10 August 2022 shows an inflation rate of 3.2%, slightly below expectations set at 3.3%, but higher than the previous reading.
This represents an important topic of discussion before the FOMC makes its final decision.
Most 2023 economic analysts believe that the Federal Reserve will not cut interest rates later this year, and that inflation will remain higher than in the first half of the year.
US Bonds – Gold Correlation
I am not going to invest in gold right now. Given the current economic conditions, with rising rates and government bonds offering good yields, I doubt investors will decide to devote resources to the gold sector.
Gold is also viewed as a safe haven asset, to be bought in times of financial stress when central banks are willing to print money to keep economies on the road to recovery.
However, we are not currently in this situation and as we will discuss in the next articles I expect a sprint of the markets in the fourth quarter of the year.
If you want to invest in gold, a more convenient strategy may be to buy shares of mining in the sector as an alternative to futures or an ETF.
I always advise you to carefully evaluate this option before deciding.
When studying stock prices, one of the most interesting is Newmont Goldcorp Corp (NYSE:), one of the world’s leading gold producers with an excellent 4% dividend.
If you buy at the right time, you can achieve a good return.
My model suggests that gold will remain fairly stable over the next few quarters, around 1940 levels.
A sideways phase like this is not very favorable for medium-term investments.
Disclaimer: The information and content provided on this site should not be considered as an invitation to invest in the financial markets. The Content is a personal opinion of Mr. Antonio Ferlito.
