Gold has always managed to stand out among other investment assets. It’s particularly the reason why most expert investors recommend adding gold as 5-20% of your investment portfolio. Other than being an excellent portfolio diversifier, gold remains a favorite for investors as it can be easily passed from one generation to another as a form of inheritance. Gold is also very liquid, it can be traded, sold, and bought in any country of the world while at the same time providing the owner with some healthy tax benefits. Unlike many other forms of investments, gold remains tactile, as owners can feel, touch, see, and enjoy it. Research also shows that gold is a safe investment asset with excellent hedging capabilities. Historically, most investors turn to gold any time there is a looming financial crisis, mostly due to its low price volatility, and its tendency to often appreciate in value during such times. Gold also presents a plethora of benefits to various industries as it is ductile (malleable), durable, shields against radiation, and is an excellent conductor of heat and electricity. Gold’s overall performance last year (2017) was positive despite low investor interest as they were preoccupied with the rise in the value of cryptocurrencies. Based on the World Bank’s October Commodities Market Outlook, gold increased by 2% in the last quarter of 2017. An unexpected weakness in the value of the dollar, the geographical tension between North Korea and the U.S, and a global sense of uncertainty may have supported the value and price of gold in the market.
Gold’s Performance in Q1 2018
Despite having a volatile February, gold’s price managed to gain more than 3% in the first quarter of 2018. The price of gold in the month of February represented gold’s first monthly loss for the year of 2018. Any chances of gains were further dampened by the announcement that the Fed (US Federal Reserve) planned to hike rates for a total of 3 times this year. During the March 22 FOCM meeting, the first hike became official with the federal funds rate being increased by 25 basis points (1/4%). However, the price of gold continued to trend upward even after the hike was made official.
Price Performance between May 1st and May 4th, 2018
On May 1st, 2018, the USD price of gold was $1,303.80 per ounce and ended the week on Friday, May 4th at a price of $1,312.70 per ounce. The gold price remained at its lowest for the 6th week with investors remaining cautious of the FOCM Tuesday and Wednesday (1st and 2nd of May) meet up. The dollar on the other hand retained a 3 1/2 month high which had a negative impact on the price of gold. High-interest rates boosted the USD which ultimately pushed the bond yield up. However, the FOCM meeting eased investors’ concerns by reassuring that increases to the interest rates would be gradual. Gold remains sensitive to rising USD interest rates as it becomes less attractive compared with other interest-bearing assets.
Price Performance between May 7th and May 11th, 2018
During the week starting on May 7th, the price of gold was at $1,312.20 and ended the week with a price of $1,319.00 on Friday, May 11th. Gold continued to shed its price value while the dollar continued nearing a four-month peak. This continued to dampen the overall appeal of gold. Earlier, the price of gold had slightly increased, hitting a one-week high but the dollar rally managed to push the gold price lower still. During the same week, the US President Donald Trump pulled out of the international Iran nuclear deal (after evidence was provided by Israel, that the country was using received funds to secretly build nuclear missiles, as many feared they would), that raised the risk of (sooner) conflict in the Middle East and cast overall uncertainty on the price of oil. This uncertainty and tension between the U.S. and Iran slowed down the dollar rally, and thereby supported the rise of gold prices at the end of the week.
Price Performance between May 14th and May 18th, 2018
In the week starting May 14th, the price of gold was $1,316.50 per ounce while the price of gold as of May 18th, 2018 was 1,293.19 per ounce. At the start of the week, gold prices rose due to a subdued dollar. Investors were keenly watching the dollar and U.S. bonds to gauge the direction of the gold price. Subdued inflation data highlighted the likelihood of lesser U.S. interest rate increases than the market expected. As of Friday, Italian political tension sparked a sell-off in Italian bonds as investors shifted their attention to gold as a safe haven. This ultimately strengthened the gold price.
Price Performance between May 21st and May 25th, 2018
The price of gold as of Monday, the 21st of May, was $1,290.20 per ounce. The demand for gold as a safe-haven asset has significantly gown down due to the announcement that the trade war between U.S. and China had been put on hold. As we neared the end of the week, the price of gold pushed above $1,300 per ounce immediately after U.S. President Donald Trump called off a summit with North Korea (whom he has made excellent head way with thus far). This might have stoked up some political tension which may have caused the price of gold to rise. As of May 25th, the Megan Markle engagement ring caused the sale of yellow gold to rise significantly. As of that day, the price of gold per ounce was $1,303.30.
Gold Price Predictions
- Potential to hit $1,600-$2,000 per ounce.
John Kaiser, expert analyst predicts that the price of gold has the potential to reach $1,600 – $2,000 per ounce by the end of the year. Unlike other analysts and experts who bank on the dollar rate or inflation to explain the rise in the price of gold, Kaiser believes that overall demand for gold will push the prices up. Kaiser believes that it is possible for such prices to become reality, even when they are not inflation-driven.
- Gold to Peak at $1,450 per ounce.
Metal Focus, a precious metals consulting firm predicts that the price of gold per ounce will ultimately peak at a price of $1,450 per ounce before the year ends. The firm expects this price rise to be accelerated by factors such as a weaker USD, slow US economic growth, and volatility in the world stock markets.
If the above predictions are anything to go by, the predicted prices represent a solid future for gold. Additionally, a rise in the price of gold will subsequently lead to a rise in the value of all gold-based products, including tokenized gold such as our DinarCoins. Backed up by blockchain technology, DinarCoins take the value and stability of gold and mix it with the speed and flexibility of cryptocurrency to create a leading gold-based cryptocurrency. Apart from their ability to be used as currency, DinarCoins are also flexible and diverse, and can provide the same financial capabilities as gold.