At the end of trade on Friday, gold futures rose a slight 60 cents to $1,944.30 an ounce, while posting weekly losses of around 1.9%, the third consecutive.
Economists assure the site “Sky News Arabia Economy” that the summer will be hot for gold, whose exchanges will remain occasional on several occasions, but they stress at the same time that reaching again $ 2,000 per ounce will not be not hard.
Facts and figures
However, we must first know an important fact, namely that gold is still up around 7% in 2023, and around 5% in a full year, despite losing more than 2.2% in an entire month, and than the average annual performance from 2006 to last year, these returns are considered excellent by any investment standard, according to Mazen Salhab, chief market strategist at BDSwiss MENA.
Why did gold fall so sharply last month?
Answering the important question, will gold return above the $2000 per ounce level, Salhab says in his interview with “Sky News Arabia Economy”: “Before answering this question, one must to answer a bigger question.. Why is gold even falling sharply over the last month?And the answer is that it is in America first and foremost.The answer brings us to the rise in the index US personal consumption expenditure of 4.7% per year, which means that US inflation is continuing, and therefore interest rates will not decline quickly, on the contrary, it could increase at the meeting next month (3, 6, 12 months) on US Treasuries, which reached over 5.2%, and therefore it became higher than the current US inflation (inflation at around 4.9 percent), which means that returns have turned positive, and that’s the death of gold, as they say.
And the Chief Market Strategist at ‘BDSwiss MENA’ adds, “The final point is that rising interest, which makes lending costs high and liquidity falling, may induce large investors and even central banks to partially sell gold for easy and fast liquidity, especially after the strong buying in the first quarter of 2023, and such operations should not be surprising, because the liquefaction of gold is possible and fast on the liquid markets, such as gold, without resorting to traditional markets.
Gold won’t lose its gains in 2023
Therefore, it can be said that it will be a hot summer for gold, the trading of which will remain casual on several occasions, but reaching $2,000 per ounce again will not be difficult (only 2.8%), because even if it falls further, the according to Salhab, who confirmed that gold will not fall sharply and lose all its gains in 2023 except in one case, namely that inflation falls faster than interest rates rise (inflation is lower and interest remains high), and this is not happening now because inflation is not falling rapidly.
Salhab believes that the completion of the interest rate hike cycle is coming to an end by economic and historical standards, and therefore the caution now is not to overestimate the speed of the US economy’s decline, which could not happen as quickly as many are betting.
When is the right time to buy gold?
As for the right time to buy gold, it mainly depends, according to the Chief Market Strategist at BDSwiss MENA, “on each person, their investment objective and the return they want, because we always see that real gold has good value ( Tangible Real Assets), especially in economies where the local currency is falling and rapidly losing value, such as Egypt, Syria, Iraq, Turkey, Lebanon, and others.As for the United Arab Emirates, which benefits from a strong and stable currency and excellent purchasing power, it is possible to resort to diversification investments between real gold and gold investment funds, as well as shares of companies operating in the gold mining sector, and these usually give distributions and are intended for medium and long-term investments.
Salhab concludes that gold remains a good option and should be part of the portfolios of investors in general, because investing in this way will save investors, especially individuals, the trouble of thinking about the daily price of gold, which is often unnecessary.
For his part, Tariq Al-Rifai, CEO of the “Quorum Center for Strategic Studies” in London, said in his interview with the economics site Sky News Arabia: “Gold can be bought at any time because the period of investment in gold should be long term, and from there it is described as a safe haven.But when following gold prices for a year, the price of gold usually goes down for the summer period, because after the price per ounce reached $2060, it has now fallen to $1946, and we can see the continuation of the price decline to around $1800 per ounce, because we have noticed that investors are selling due to pressure from the US debt ceiling.
However, Al-Rifai expects gold prices to reach an all-time high in the near future, especially at the end of the current year 2023.
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