The World Gold Council (WGC) has heralded current gold price levels as an opportunity for investors to add the precious metal to their portfolios at favourable rates.
While prices have already begun to recover lost ground after selling pressures forced the bulls lower, current prices remain under £1,555 ($1,900) – which is a rarity so far this year.
The WGC expects that gold prices will continue to run hot and cold over the next four weeks or so, as it benefits from safe-haven demand (fuelled by the Israeli – Hamas conflict in the Middle East) but feels the pressure from strong bond yields.
In a new market commentary report issued this week, the WGC’s analysts laid out what they expect for the month of October, explaining, “With bond yields continuing to move higher alongside a still buoyant U.S. economy, gold is likely to face continued turbulence over the next couple of weeks. But we don’t see a material downtrend being established as support remains from fragile equities, rising recession risk, inflation volatility and continued central bank interest in gold. This could represent a buying opportunity to some investors should the market become excessively short.”
One of the key themes of the UN Conference on Trade and Development (Unctad)’s annual report which was released on 04 October is the rising prospect of a global recession – something that would engulf not just the US economy and make a recession there more pronounced, but major and developing nations around the world.
Unctad’s globalisation and development strategies director, Richard Kozul-Wright said, “The global economy is stalling, with Europe teetering on the edge of recession, China facing strong headwinds and financial stresses are reappearing in the United States.”
The UN believes that the policy of increasing interest rates is a fallacy, with a pro-growth stance a more appropriate course of action. Its projections have global growth stalling with the rate falling to 2.4% in 2023, down from 3% 12 months ago. It says that growth isn’t on course to increase next year.
The report warns, “Tighter monetary policy has so far contributed little to price easing and at a steep cost in terms of inequality and damaged investment prospects. Central bankers should relax their 2% inflation target and assume a wider stabilising role. At this moment, pushing down on the fiscal brakes and keeping interest rates high is the wrong policy combination for steadying the global economy.”
Slowing growth and a sluggish economy is a boom for gold, which thrives as Wall Street struggles. Don’t wait for that reality to kick in. Heed the World Gold Council’s advice. Buy gold now.
