Investing in Gold in 2018
The price of gold finally hit a new high after three months, rising up to $1,319.27 an ounce. CNBC reported that the precious metal had been rallying recently, bouncing back from late last year. It’s now going steady, prompted by optimism around the Euro in relation to the US dollar’s own four-month low drop. Consequently, it wasn’t able to fully capitalize on the USD’s weakness up until it hit its new high recently. With this new surge, it looks like the gold market is off to a good start in 2018.
Previously, a lot of potential investors were adamant in investing in gold. The precious metal generally underperformed in 2017, dropping to some of its lowest price values in recent memory. A lot of analysts alluded to the Fed’s public plan to raise gold’s rates in the coming years as the reason for its underwhelming activity. However, Toronto-based TD Securities’ commodities strategist Daniel Ghali claimed that investors are not convinced the Fed’s plan will take full effect. “They’re starting to doubt that the Fed will hike rates as much as they said they will. That provides a more attractive environment for gold,” he explained.
This newfound interest in the precious metal, paired with its recent bullish activity, led people to ponder whether it can be a good investment in 2018. Some analysts encourage investing in the precious metal because it has long been a safe haven from unwanted economic events, many of which have been effects of political turmoil. We pointed out here on Harvard GEO that gold has long been free from any single sovereign government or corporate entity, which means geopolitical events don’t affect its market as much as other goods like oil.
Its safe haven status even outshines other assets when it comes to trading as well. FXCM states that gold is still very much in-demand as a trading investment compared to other commodities. A lot of people trade the metal as derivatives through futures and options, while others still trade it over-the-counter through the New York Commodities Exchange. Unlike copper and other metals, there is hardly any expiration date when it comes to trading in gold. Investments can be held for a long period of time, or at least until the investor seeks a different commodity. Investors have long seen this as an attractive attribute of gold, especially when up against other precious metal commodities.
It’s important to note, however, that gold is now seeing new and strong competition recently, which may affect its future performance. Many experts consider Bitcoin, currently the most popular type of cryptocurrency, as gold’s biggest rival. Banker and writer Naeem Aslam recently discussed the comparisons between the two investments, but for gold, he stressed how it has long been used against inflation and other unfavorable economic activities. There’s also the possibility of discovering more gold, a factor that usurps Bitcoin as it only has a production limit of 21 million units. However, Bitcoin can be equally, or maybe even more, compatible with geopolitical events than gold. For example, the increasing tensions between the United States and North Korea dropped gold prices by $31 while the value of Bitcoin went up from $1,985 to $3,000.
By the looks of things, gold has the potential to attract the attention of numerous investors in 2018. The catch is that since it has been volatile last year, there’s an increased risk that the trend is not over. Only time will tell if it would be the case, but the bottom line is that for traders willing to take that risk, investing in gold is a logical choice.