How high can gold prices go?

In times of economic uncertainty, such as in times of economic recession, more and more people are resorting to investing in gold because of its enduring value. Gold is often considered a safe haven for investors in turbulent times, and the Gold Price Per Ounce can be used as an indicator of the current market value. When expected or actual yields on bonds, stocks and real estate fall, interest in investing in gold can increase and drive up its price. Gold can be used as a hedge to protect against economic events such as currency devaluation or inflation. In addition, gold is also considered to provide protection during periods of political instability.

The fall in prices since April has probably also acted as an incentive in the price-sensitive Indian market. A recession would favor gold prices, but the sharp rise in interest rates used to deal with inflation has so far limited the rise of the precious metal. The CPI is the best-known indicator of inflation and measures the percentage change in the price of a basket of goods and services consumed by households. The dollar is likely to drive up the price of gold due to increased demand (because you can buy more gold when the dollar is weaker).

Of all the metals on Earth, gold shines the brightest when it comes to maintaining its value and being a vehicle for building and preserving wealth. However, gold closed the first half of the year around the same price at which it began, backed by multi-decade highs in inflation and continuing geopolitical uncertainty. The dollar and the desire to keep gold as a hedge against inflation and currency devaluation help boost the price of the precious metal. In the short term, Indian demand for jewelry could weaken due to the increase in import duties from 7.5% to 12.5% and the depreciation of the rupee, affecting prices.

On the industrial side, gold is used in electronics and is benefiting from the rise of nanotechnology. Some investors may choose to maintain some exposure to gold in their portfolio to diversify, as a protection against the fall in stocks and bonds. This is because current economic conditions will give us a clearer idea of where the price of gold will go. Nowadays, gold is sought, not only for investment purposes and to make jewelry, but it is also used in the manufacture of certain electronic and medical devices.

In recent months, the strength of the US dollar has contributed to the downward momentum in the commodity, but the fundamental reason why most analysts do not have a longer-term bullish outlook on gold — the rise in yields on US Treasury bonds — remains intact. The World Gold Council, the market development organization for the gold industry, recently opined that the commodity will face two key obstacles.