Planning to buy gold?September is the best time-News

The World Gold Council (WGC) stated that September is one of the best times to buy gold because it believes that inflation is the reason for large institutional investors to pay attention to gold, leading to rising price pressures, and these pressures are already hurting consumers.

WGC stated in a report: “September has been one of the strongest months in the history of gold prices. This may provide an opportunity for investors as we enter the fourth quarter of this year. After hitting a one-week high on Tuesday, the intraday rise on Wednesday. The trend is close to US$1,800, breaking the real-time trading range between US$1,782 and US$1,804.

WGC quoted its analysis as saying that gold achieved a positive return in September, with a “confidence level” approaching 90%.

According to the report, the two main drivers behind this momentum are strong physical demand and increased investment activity. “September’s price movement may be driven by two trends: the period of strong demand associated with the peak Indian wedding season and other festivals in October and early November, and the increase in global investment activity after the usually calmer summer. Therefore, investors Often use September as a good time to add gold to its investment portfolio,” the report said.

WGC particularly believes that there is room for gold to rise in September this year, which indicates that August lacks price movements except for the flash crash at the beginning of this month.

“The actual government bond yield calculated from the U.S. 10-year TIPS yield hit a historical low in early August, which is usually good for gold because its opportunity cost has improved. Although the correlation has been very strong in recent years, we see Gold prices sometimes lag behind this trend, and this seems to be the case in August. This may be a product of a stronger US dollar. If real interest rates remain below -1.0%, especially in the case of weak employment data at the end of the month, we will not be right. Surprised by the rise in gold prices,” the report said.

WGC stated in its recent report that institutional investors will focus on gold this fall, especially John Paulson, Paulson’s president and portfolio manager, and Mark Mobius, partner and founder of Mobius Capital. The celebrities emphasized that gold is a store of value.

“The principle of gold as a store of value is one of the key messages for us to invest in gold; in recent years, we have seen a significant decline in the purchasing power of fiat currencies, and this trend has continued since the last century,” WGC said.

“There are some clear, little-known examples of inflation. “Shrinking inflation,” or the idea of ​​getting less at the same price (a clever way of rising prices) has become more and more common. “Hedonic adjustment”, usually in the context of electronic products, where commodity prices are lowered to reflect innovation-such as increased functionality or processing power-will have a deflationary effect, although total consumer spending may decrease and remain the same Or it may increase,” the report said.

“Although inflation may be temporary in the view of the central bank, consumers and investors may feel differently. This may lead to an increase in the allocation of physical assets such as real estate, TIPS (Treasury Inflation Protected Securities), and commodities such as gold. , These assets performed well in an environment of high inflation.”

Despite various volatility, precious metals fell by 0.6% month-on-month at the end of August and fell about 4.0% year-on-year.

“The slight fall in gold prices in August was mainly driven by kinetic factors, mainly the outflow of ETFs and the strong reversal of July gold returns, as well as the slight increase in interest rates. The negative impact of this was offset by the follow-up actions of the fall in interest rates in July. Although 8 There was a flash crash on the 9th, but gold ended a calm month, but it remained stable.”

WGC is answering one of the hottest questions in the minds of investors, which is one of the reasons for the flash crash on August 9, when the price of gold fell 4.0% in just 15 minutes to less than US$1,700 per ounce. WGC pointed out low liquidity And technical positioning is the main reason behind the flash crash.

“This happened at a time when all assets in the global market were generally low in liquidity. There are some technical components that may cause this rapid sell-off. First, the technicians emphasized the recent “death cross”, that is, the 50-day moving average fell below 200. Day moving average, which is considered bearish. Second, the rapid sell-off may have triggered some stop-loss orders that may be located near $1,700, which has a snowball effect, leading to more selling,” the report pointed out.

issacjohn@khaleejtimes.com

Isaac John

The editorial director of Khaleej Times is a well-connected Indian journalist and economic and financial commentator. He has worked in mainstream journalism in the UAE for 35 years, including 23 years in Khaleej Times. He is a graduate of English major and a graduate of economics major, and has won more than 20 awards. He is widely praised for his real and insightful analysis of global and regional business and economic trends, and is respected for his keen understanding of local business scenarios.