While many imported and locally manufactured goods and products are the subject of inflationary pressures around the world, the precious metal, gold, has witnessed a remarkable decline in the recent past, reaching its lowest level seen more than two years. Observers expect that gold prices are on the way to record a decline due to expectations of a significant increase in interest rates by the world's central banks to tame rising inflation.
Gold prices fell to $1661.97 an ounce recently. Prices have fallen significantly during the past two months, coinciding with the rise of the dollar, through which international oil prices are also priced, which also constitutes a dilemma for many peoples of the world because of their desire to obtain energy products at prices that suit both producers and consumers at the same time.
Gold is considered highly sensitive to rising interest rates. With the decline in gold prices, we find that the prices of other metals traded on world markets, such as silver, platinum and palladium, to be on the decline as well. Gold is usually considered as a hedge against inflation, as it is sensitive to interest rates and does not generate returns in such situations, leading to the decline in its price. The weaker the dollar, the greater the rise of gold.
One wonders whether this constitutes an opportunity for investors to buy gold at the present time or to stay away from it. The current global situation is unstable due to the Russian-Ukrainian war, which is raging daily. It is well-known that investors pivot to gold in the event of wars and natural disasters. The prices of this metal depend on supply and demand, and the quantities produced. Demand is driven by the desire of individuals and institutions to acquire it. It is also affected by the monetary and financial policies and decisions of global central banks, in addition to the fluctuation of the purchasing power of the US dollar. Gold prices also vary in the event of political events and turmoil in the world, as some investors take advantage of their money to risk heading towards the markets to buy this metal in addition to investing in the stock and bond markets.
Investors are also well aware that gold is a precious metal, and is distinguished from other metals by several characteristics, including its attractive appearance and its ability to maintain its shape for long periods, but its high price is due to its scarcity linked to the challenges of extracting the metal in difficult mining operations and refining it from among other metals.
Gold has played a major role in the past because of its economic and social importance in people's dealings with each other to obtain products and other commodities by bartering with this metal, while many governments take this currency as a reserve in central and commercial banks. Now it looks for stability.
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