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Egypt news News / Where are gold prices moving against the backdrop of unrest and cheap money?


Will the glitter of gold be extinguished or enlightened this year amidst a tumultuous world of trade wars, military tensions and cheap cash inflows into the financial markets?

A key issue for big investors and savings As the world enters a gray period in which true investment criteria disappear, investors invest in secure channels that, at the same time, guarantee a return on their wealth.

Investors now have many doubts about traditional money-making channels. The financial market bubble is at its peak and investors are aware that the upward movement of Wall Street indices does not mean a real economic recovery, but an artificial recovery. It wavers on the brink of recession.

Investors are aware that the ongoing recovery in Wall Street, the largest financial market in the world with a market cap of $ 27 trillion, is caused by cheap cash injection policies and corporate buybacks.
The cost of homes and apartments previously used by large investors as savings to protect their wealth from erosion is also falling into very large financial centers, falling in London, Miami and Vancouver. In addition to the low returns earned by holders of savings from their commercial bank accounts.

Thus, people with high net worth are already trapped. It looks like gold has a real chance of going above $ 1,500 an ounce, according to many precious metals experts. In this regard

The World Gold Council (WGC) said in its semi-annual report for 2019 that there are several factors supporting the rise in the price of gold this year and into the second half of next year.

Among these factors is the uncertainty about the direction of global stock exchanges, which have continued to increase over the last three years and still remain. The second factor in support of the rising gold price is the interest rate and quantitative easing policies currently adopted by central banks led by the Federal Reserve.

The policy could spark a currency war on the global forex market, valued at about $ 4.5 trillion a year, and could lead to a race to shrink countries 'currency values ​​to automatically increase exports' competitiveness to a monetary disorder.
The third factor supporting the rising price of gold is the Chinese-American trade wars, in which Presidents Jinping and Trump exchange accusations and seek to win them with all instruments of money, including the depreciation of the dollar and the yuan.

This factor increases the turmoil in the financial markets and the war on fees reduces the volume of world trade. The fourth factor that influences is the tendency of global central banks to buy gold, especially the banks of countries that are embargoed by the US and do not allow them to deal with the dollar or those who fear the dollar risk to their economy .

In the first quarter of 2019, central banks purchased a record 715.7 metric tons of gold, the World Gold Council announced.

China's gold reserves rose from 600 tonnes at the end of 2005 to 1852 tonnes at the end of 2018, becoming the world's sixth largest gold reserve, China said in its latest official figures released on Tuesday. China is known to increase its purchases of gold by taking consistent steps to liberalize the yuan exchange rate and convert it from a local currency into a global currency. China also has investments in US Treasury bonds valued at $ 1.17 trillion, which it seeks to gradually reduce.
According to data from the Russian Central Bank, in April, Russia added 274 metric tons of metal to its reserves in 2018, increasing Russia's total gold reserves to 2113 tons.

Added to that ,? There are other factors that are driving investors to buy gold, including a slump in global gold production in South Africa, which ranks second in Africa after Ghana.

An increase in global debt also threatens the trading of fixed assets in the world and can lead to the bankruptcy of many countries that are unable to service their debt, as Argentina has done. But one of the most important factors determining the course of commodity markets in the world, mainly gold, is the US interest rate and the dollar exchange rate as gold moves in the opposite direction to the dollar rising and falling.

It is well known that President Trump and America First policies and huge defense spending add to US government debt and fuel geopolitical tensions.

Gold prices plummeted on the London precious metals market on Tuesday as the dollar rose to a two-month high as investors expected a two-day meeting of the US Federal Reserve, which is expected to cut interest rates by a quarter. In the morning session, spot gold fell 0.3% to $ 1,422.85 an ounce. US gold futures also rose by the same $ 1,423.90 an ounce.

Date: 2019-07-31

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