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May it be a year of Gold

Gold has always been a haven for investors. In times of uncertainty, mainly since the Covid outbreak, with the continuous lockdowns and inflation fears, market fluctuation and volatility force people to turn into an asset that is safe; and investing in gold always seemed to be less risky.

In August 2020, the price of this precious metal breached the $2000 mark for the first time, printing an all-time high at $2075. But why did gold gain such popularity? A series of quantitative easing along with an environment of low interest rates as the US Federal Reserve cut interest rates to zero, directly benefited the yellow metal as it reclaimed its safe haven title.

Does that imply that Gold is heading lower from here? According to legendary investor Byron Wien, gold prices are expected to rally 20% in 2022 as he predicted volatility in the S&P500 and hot inflation will turn investors towards the yellow metal safe haven. Hence, even in times of risk on, all-time highs, and higher-than-expected interest rates, investors would want to diversify and allocate a portion of their investments into safe havens such as Gold, not to forget the expected increase in demand for this ‘crisis commodity’ in times of high inflation.

Looking at the below daily chart, we can see that the downtrend that has been set on the yellow metal after printing an all-time high was breached in November (failed breakout), and again recently in December, suggesting building bullish momentum with confirmation of prints holding above the $1800 support level.

A more zoomed-in chart of gold in 2022 confirms the above longer-term analysis, with the yellow metal double bottoming at 1800 and printing higher as the US dollar lost some ground.

So how can you invest in gold if you want to?

Well, if you have really big pockets, you can invest in physical gold, store it and keep it safe. For everyone else, you can invest in companies that mine gold, Exchange-Traded commodities, or through a secure broker, like SquaredFinancial, that provides access to spot, CFDs or futures.

Whatever you choose to invest, it is recommended to always diversify your portfolio and include a ‘secure’ instrument, like gold.

 

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