Gold prices over the past few weeks have been rising sharply.
In early November, the price of gold was at its lowest point in over 6 months, languishing at $1,628 per ounce, however the sudden rise in value has culminated in gold prices being at their highest since the summer, arriving at over $1,796 per ounce on today’s market.
As it stands, the price of gold is aiming to recapture a five-month high at around $1,800.00 as the risk-on profile is regaining traction.
Volatility in a market which is usually not so volatile due to gold being regarded as a physical store of value and therefore the preserve of conservative investors who wish to keep an investment in the precious metal as a safety net against any central bank policy affecting the currency markets, adverse national economic conditions or corporate decisions affecting stock prices when investing in listed companies.
The very dynamic that is currently taking place in that gold is fluctuating significantly in value has led to some attention from analysts and investors, some of which have called it a ‘bull run’, and others who are making wild speculations that gold could increase dramatically in value to around $3000 per ounce in 2023, a figure which seems outlandish and stratospheric.
There are also a number of conservative views, some of which are that although gold finished last week’s trading at almost $1,800 an ounce, there is a high chance for a move lower as the Federal Reserve can still surprise on the hawkish side.
The Federal Reserve Bank is likely to announce another interest rate rise on Wednesday, with markets looking for a slower tightening pace of 50 base points versus 75 base points, and when looking at precious metals being traded on commodities exchanges rather than on an over the counter basis, things are already looking to slow a bit.
On this basis, gold is trading essentially flat during the course of last week, with February Comex gold futures remaining very level at $1,815 an ounce.
It is all very well taking the opinion that people may invest in gold should a recession set in, in order to safeguard their capital against possible economic woes in the currency and stock markets, but in the case in which interest rates rise and recessions bite, there is a tendency toward maintaining cash to pay for increased costs of living during a time when the means of most are stretched, meaning that many people do not have the extra capital to invest and will concentrate on everyday expenses.
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