Gold is a highly sought-after asset due to its low to negative correlation with all major asset classes, making it an effective portfolio diversifier. By studying the gold price pattern, investors can gain insight into the lifetime of the gold trend. Gold is a scarce asset, but with an uncertain supply, so forecasting gold prices for the next 10 years can often lead to positive gains. When US government bond yields rise, gold prices tend to trend sideways or even downwards, while declining yields cause very positive movements in gold prices.
Demand for gold has increased as electronics manufacturers have seen the use of gold in their products for conductivity, and it is also consumed as jewelry. Gold is also known to be a good hedge against rising prices due to inflation fears. Coronavirus relief packages and periods of economic recovery led to a decline in the price of gold, while rising inflation, the spread of the pandemic and geopolitical tensions made investments in gold much more attractive. If the exchange rate of one of the currencies depreciates relative to other reserve currencies, then the price of gold will increase relative to currency depreciation.
Other industry experts think that the price of gold has peaked during this economic crisis and that, as economies recover slowly over the next few years, the price of gold will decline. Investing in gold has never had a better time to start than now, so getting involved in trading such a commodity can be beneficial.
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