Until the end of 2023, gold will remain a valuable safe-haven asset. Gold's initial rise to $2,000 an ounce after the banking crisis was a textbook reason why investors should have gold in their portfolios.
Although tensions in the banking crisis have weakened in recent weeks, risks remain elevated amid constantly high inflation and a slowdown in economic activity. The global economy has not yet fully felt the consequences of the aggressive tightening of monetary policy by the Federal Reserve. In May, as economic conditions deteriorate, the Fed will be forced to change its monetary policy. After significant March volatility, markets are expecting a 25 basis point interest rate hike next month. However, markets are also expecting rate cuts in the second half of the year. This is positive for gold.
Still, the market has yet to assess the negative impact of policy changes in the fight against inflation and the growing likelihood of a recession. In such scenarios, the attractiveness of gold increases. As for the potential growth of gold prices in the current conditions, according to data from global exchange-traded funds backed by gold, there was a significant increase in investor inflows in March for the first time in 10 months.
Also, according to Comex, speculative positioning is relatively low compared to previous rallies to historical highs. March inflows indicate an improvement in sentiment in the precious metal market, but current reserves are significantly below historical levels. The last time gold was worth $1,970 per ounce was in April 2022, global gold reserves in ETFs were 12% higher than today.