Beginners guide to investing in gold
- Why is gold rising?
- Gold is drawn in two directions.
- Prices are about to rise
- Is it time to buy?
As global stock markets head into indefinite territory, another asset class is attractive to investors: gold. gold price
Gold prices rose earlier this month to trade in excess of $ 1,800 an ounce, surpassing a major psychological stage not reached since 2011.
Now, as the coronavirus uncertainty continues to push the precious metal higher, some experts are suggesting that gold may reach record levels.
This has left many people wondering if now is the right time to invest. CNBC Make It spoke to the experts to find out their advice. gold trading price
Why is gold rising?
Gold is up about 19% so far this year, as lower interest rates and central bank stimulus add to the current bullish momentum for the precious metal. gold stock
Gold is often viewed as a "safe haven" asset during times of uncertainty because it is less volatile than other investments, such as stocks. Moreover, the metal is moving back towards the US dollar, which means that when the dollar goes lower - as it has recently - gold rises. gold trading strategy
However, the current downturn of coronavirus is slightly different
Gold is drawn in two directions.
Even with the rise in Covid-19 cases and the worsening of economic data, stock markets continued to rally. This caused gold to enter a new business territory, said Cameron Alexander, metals demand manager at market data company Refinitiv. robinhood gold
"Gold is being withdrawn in two directions: the first is uncertainty," Alexander said, referring to the epidemic that is still escalating. He noted that "stocks are still doing really well", driven by central bank incentives.
Prices are about to rise
While the pandemic hit the markets in late March, gold also suffered from a sell-off as investors scrambled to free up liquidity.
But since then, buyers have returned to gold, seeing it as a safe store for their money. So far this year flows to gold exchange-traded funds (ETFs) globally have reached about $ 12 billion, according to BlackRock iShares data.
This made the experts predict higher volatility in the future. "I wouldn't be surprised to see gold test all-time highs in 2011 at around $ 1900 an ounce," Thomas Tao, head of APAC iShares investment strategy at BlackRock, told CNBC Make It.
Last month, Bank of America backed a similar forecast of "all-time highs". In April, the bank said the precious metal could reach $ 3,000 an ounce. Michael Widmer, strategic commodities analyst at Bank of America Securities, said the rally will be fueled by continued global uncertainty - at least over the next few years.
For the time being, there are a lot of concerns about keeping gold rising. We need more visibility before gold prices start to peak.
Is it time to buy?
These bullish projections indicate higher potential returns in the future. But with prices already rising to multi-year highs, entry costs are also significant.
This raises the question of when to purchase. However, Albert Ching, CEO of the Singapore Bullion Market Association, said the question should be rephrased from “when” to “How much?