“Gold” rose rapidly after the war. After receiving enough messages it started shrinking. While other factors continue to support the price, fluctuations are likely during this period.
“Gold” rose rapidly after the war. After receiving enough messages it started shrinking. While other factors continue to support the price, fluctuations are likely during this period.
It has been more than a month since war broke out between Israel and Hamas. Gold prices in the global market rose by around 10% and started to stabilize. Investing in gold is not easy these days. This affects the volatility of gold while the war is not yet over and other factors
Investing in gold through structured funds can help reduce the chance of losing principal while offering you the opportunity to earn income both when the price of gold rises and falls.
Gold is an asset that investors often think of during times of unrest or war.Historical data reflects gold prices rising by around 5-10% in the month leading up to the war. Although this war between Israel and Hamas is a little different from the past, there are no early warning signs. But gold prices also rose by around 10%. This is similar to the past, however, as past statistics indicate that war is the only short-term factor driving up gold prices.
This will have a greater impact on the price of gold than when other factors receive news of war. Especially in view of the demand for gold. This is the factor that supports the price of gold on a long-term basis.
The World Gold Council said Central banks around the world are steadily increasing their reserves. The volume of gold purchased in the first half of this year has reached an all-time high. Gold buying volume increased by 120% in Q3 2023 compared to Q2 2023. Taking into account the beginning of the year, central banks around the world have bought roughly 800 tons, roughly 14, of gold. % higher than the same period in 2022.
The central bank’s monetary policy also affects the price of gold. Gold prices were found to move in a range of +/-5% after the Federal Reserve (Federal) policy stopped raising interest rates, which is in line with the current scenario where the Federal Reserve (Federal) decided to maintain policy. 2 Interest rates for consecutive appointments.
And according to market estimates (CME FedWatch Tool), there is a 97.4% chance that the Fed will decide to keep the policy interest rate at its next meeting (December). If the central bank does not raise the policy rate again, that means the current rate range of 5.25-5.50% is likely to be higher. And the price of gold is likely to fluctuate within a range of +/-5%.
Additionally, TISCO ESU’s data found inflationary factors that also affect gold prices. Gold returns an average of 8% during periods of inflation in the 2-5% range, with the recent US inflation rate (CPI) at 3.2%. He pointed out that the price of gold has responded to the issue of war in the past. There is less chance of escalation.
When including the current price of gold, the cost of the mine site and the difference in gold prices, this is approximately USD 1,600/oz. Thus, the risk of gold prices falling below this level is very low.
The price of gold rose rapidly after the war. After receiving enough messages it started shrinking. While other factors continue to support gold prices, further volatility in gold prices is likely.
Investing in gold in this scenario can take advantage of structured funds that invest more money in lower-risk debt instruments. Invest the rest in options contracts to open up the opportunity to earn income when gold prices rise and fall to reduce the chance of losing principal, such as government bonds.
If you have any questions about your personal financial planning. You can send your queries to prtisc.[email protected] Article I by Nattaborn Thonwongtawat AFPTTM Wealth Manager
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