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Precious metals in correction. When will the turnaround come?

Although we may be seeing bearish sentiment across markets at the moment, this does not necessarily signal a portfolio sell-off. Yes, the recession is a real threat that investors fear, but is it really a threat or an opportunity when it comes to investing? It depends on the perspective. A correction across segments can undoubtedly be an interesting buying opportunity.  While certain forms of investments lose value, those that are considered safe havens, such as precious metals, tend to rise in value during such periods.

It is in the case of precious metals that we have seen an interesting correction recently. Over the past week, gold has written 2.9 percent off its value while silver has lost a total of 9.6 percent.* In late September (which was the worst for the markets in years), gold recorded its lowest levels in two and a half years. In practice, this could mean that a reversal of this trend is coming soon. Inflation across the global economy has been rising steadily and investors are wary.

 

The price of gold has been hovering around USD 1,650 per ounce in recent days, whereas shortly after the invasion of Ukraine by Russian troops it was more than USD 1,980 per ounce.* Its price has been steadily declining since the spring of this year, and considering the currently turbulent situation (not only) in the markets, it is to be expected that this trend could soon be reversed.

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Graph: Development of the value of gold over the last 5 years. (Source: Investing.com)

On the other hand – in the coming weeks, we are looking at what is usually the best period for the markets – the last quarter of the year. This can be a pretty bullish period for stock titles considering the upcoming Black Friday, which usually means high profit margins for companies from sell-offs and will ultimately reflect positively on investor sentiment in the stock markets. This is followed by Christmas shopping, which could bring another wave of positive sentiment.[1] It is therefore possible that this period will pull stock markets higher and we will have to wait some time for gold to rebound from the current lows. . .

 

Olivia Lacenova, chief analyst at Wonderinterest Trading Ltd.

 

 

* Past performance is no guarantee of future results.

 

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

 

This text constitutes marketing communication. It is not any form of investment advice or investment research or an offer for any transactions in financial instrument. Its content does not take into consideration individual circumstances of the readers, their experience or financial situation. The past performance is not a guarantee or prediction of future results.

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Opozorilo o tveganju: Pogodbe na razliko so kompleksni instrumenti in prinašajo veliko tveganje hitre izgube denarja zaradi finančnega vzvoda. Pri trgovanju s pogodbami na razliko pri tem ponudniku denar izgubi 81.75% računov malih vlagateljev. Razmislite, ali razumete, kako delujejo CFD-ji, in ali si lahko privoščite tako veliko tveganje z izgubo denarja.