Gold prices have shown yet another disappointing performance this week, going down to the lowest settlement price in 2023. This marks the fourth consecutive weekly loss for gold, which has seen its value steadily decrease over the past month.
The reasons behind this negative trend are multifaceted. Firstly, there has been a rise in bond yields and a strengthening of the US dollar due to increased investor confidence in the economy’s ability to recover from the pandemic-induced recession. These factors have weighed on gold prices as investors move away from safe haven assets like gold in favor of riskier investments that offer better returns.
Additionally, geopolitical tensions between Western powers and China have eased off recently, further reducing demand for gold as an inflation hedge against currency volatility. The US Federal Reserve’s accommodative monetary policy stance has also kept borrowing costs low, limiting speculative activity in gold and other commodities as investors move capital into stocks and bonds instead.
While these conditions are likely to persist throughout 2021 and into 2022, some experts believe that we may see a reversal of fortunes later in 2023 as economic conditions normalize and inflationary pressures begin to build up once again. Inflation typically leads to higher demand for safe-haven assets like gold as investors look for ways to protect their wealth from depreciation caused by rising prices so it is possible that we will see a recovery in gold prices by then.
In the meantime however, it looks like gold will continue its downward spiral with no signs of recovery anytime soon. With central banks around the world continuing their accommodative policies and geopolitical tensions still simmering, investors would do well to remain cautious when investing in gold until more favorable conditions return later this year or next year at least .