The gold price has been in a downward trend for months, and in mid-August 2023 gold fell to 1,735 euros or $1,884 / troy ounce, its lowest level since March.
The most important factor for the gold price is and remains the monetary policy of the Fed and the ECB with which the central banks are currently trying to create a balancing act: On the one hand, high interest rates should push back inflation, on the other hand, the economy should not be restricted too much.
What's next for the rest of 2023?
Gold price: The development in the chart
The BRICS summit in South Africa was eagerly awaited. Many expected the BRICS countries to announce a new currency, possibly backed by gold. If the countries could establish such a currency as an alternative to the dollar in world trade, this would probably drive demand for gold and cause the price to shoot up, because central banks would have to stock up on gold.
However, the introduction of such a BRICS gold currency seems to remain only a vague idea for the time being.
Although the BRICS are striving for de-dollarization, the countries have yet to present a concrete plan. Instead, there were calls for increased use of their own local currencies for trade among themselves.
Rising bond yields depress gold price
Gold does not pay interest and therefore does not yield any current returns. In an environment of high interest rates, government bonds issued by countries with good credit ratings are therefore more interesting than gold for defensively oriented investors.
The interest rate for 10-year U.S. government bonds is now 4.3%, German government bonds yield 2.7% and Austrian bonds 3.3%.
As long as the interest rate on such government bonds remains attractive, this will depress demand for gold and thus also the gold price.
Economy: Slowly drifting into recession
It was already apparent at the beginning of the year that the recession would hit the real economy in 2023. It was still unclear how much the economy would actually weaken.
However, while the U.S. economy performed surprisingly well and grew more strongly than expected in the second quarter, the euro zone is still in a downturn: experts expect economic output to stagnate or decline in the second half of 2023 as well.
Germany, after all the largest economy in the EU, is even in a somewhat worse position. The German economy is already regarded as "the sick man of Europe" and is almost certain to shrink.
Gleichzeitig sehen immer mehr Experten Anzeichen, dass auch die US-Wirtschaft doch noch in eine deutlichere Rezession rutschen könnte.
A period of recession, however, usually boosts the price of gold, as investors move their money into the safe haven of gold in bad times. If investors flee into safe precious metals, this also increases demand and thus the price. In addition, a recession usually also leads to interest rate cuts again, which would make gold seem more attractive again...
What is the FED planning?
One factor holding back the gold price at the moment is the great uncertainty about the further plans of the American FED.
Although the majority of investors expect the key interest rate to remain unchanged at the next meeting of central bankers in September, another rate hike could be on the cards in November. Analysts, on the other hand, who tend to fear weak economic development, even assume that there could be a turnaround in interest rates. As long as it is not clear where the key interest rates are headed, the gold price is likely to remain volatile.
At the Jackson Hole meeting at the end of August, Fed Chairman Jerome Powell hinted at acting with caution, which can be interpreted as an interest rate pause in September to give the economy breathing room again, but made it clear that the Fed is prepared to keep turning the interest rate screw as long as necessary to curb stubborn inflation. Also ECB chief Christine Largarde made no concrete announcements to the coming interest rate meetings. A further interest rate hike is therefore just as possible as an interest rate pause.
Should I buy gold now?
There is no absolute right time to buy gold, as the gold price is constantly changing. Nevertheless, we believe that gold is currently strongly undervalued and expect the price of gold to rise in the coming months.
Prices for selected bullion products
Preise zuletzt aktualisiert am 24. February 2024, 13:02 Uhr
My advice to all my customers: Do as the professionals do and buy smaller quantities over a longer period of time. This way you balance out price fluctuations up and down.
Buy small units of gold coins and bars. If you want to turn the gold into money later, this gives you flexibility. Be sure to view gold as a long-term investment. As a gold investor, you should not panic in the face of a falling price and sell your gold too quickly.