Long-term review
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According to experts, the short-term price dynamics for the yellow metal depends on a number of fundamental factors. In the future, conjuncture on inflation, interest rates, and the US dollar will affect the value of gold. They will be decisive for the precious metals market, analysts say.
Long-term investors do not always pay attention to the dynamics of the price of gold. It is much more important for them to fix the yield from the many-year price increase for the yellow metal. However, it is necessary to monitor short-term fluctuations in value if you need to increase investment in the precious metal. Experts pay attention to a number of factors that cannot be ignored when assessing the situation on the gold market.
- Market conditions. In a situation when market conditions are positive, securities become an attractive asset for investment. In the event of a worsening economic outlook, part of your capital should be transferred to gold in order to protect it from volatility in financial markets. In this situation, the precious metal will receive support for growth.
- The rate of inflation. One of the main factors is high inflation rates for investors for buying precious metal in order to diversify their assets. The cost of the yellow metal in conditions of hyperinflation increases significantly. In this situation, the national currency depreciates and the demand for precious metals reaches record levels. Note that low inflation in the United States has become one of the reasons for the suspension of the rise in interest rates by the Fed.
- Dynamics of interest rates. When the regulator raises interest rates, it negatively affects the value of gold. In this case, traditional assets (for example, shares) bring more returns to investors, while precious metals do not provide interest income. At the same time, the high rates of the US Federal Reserve are strengthening the US currency and the price of gold is under pressure, as they have an inverse correlation to each other.
- The dynamics of the American currency. The yellow metal is traded worldwide in US dollars. With the growth of its course, the global value of the precious metal decreases. Against the background of the strengthening of the US dollar, other national currencies depreciate, and the price of gold increases. For example, the devaluation of the Russian ruble doubled the value of the precious metal in rubles at a double rate. According to experts, gold is a real asset that retains its purchasing power for a long time. In the case of a decline in confidence in the traditional currency, its value decreases and the demand for gold begins to grow.
Currently, market participants are seeking to actively influence the market for precious metals. In this case, experts advise to buy gold, focusing on the long term, so as not to depend on short-term price fluctuations.
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