With the current economic outlook, it’s easy to see why many believe that gold’s duality creates a positive outlook for Q3. For starters, gold’s duality has helped protect against market downturns and summer market lulls. It also has an alignment with the recent economic recovery from the pandemic, as well as the slowing growth of China and its power rationing.
Golds dual nature remained in focus in Q3
Gold remains an investment asset that offers protection from the downside, especially when the economy is facing risk. Although the global economic situation is relatively stable, there are some uncertainties that could negatively affect the market. These include political conflicts, stubborn inflation, and unresolved issues in most economies. In addition to this, the rising US dollar and the Fed’s tapering of its assets could put downward pressure on the price of gold. Fortunately, gold’s dual nature can help it overcome these challenges.
In Q3 of 2017, gold’s price fell after the Federal Reserve’s announcement of a plan to wind down its asset purchases. In addition to this, broad stock markets were weak, and bond yields spiked. However, the commodity sector led the pack. This was due in part to strong demand for gold jewelry in India, which was a result of an improvement in the Indian economy. While this has been a boon for the gold industry, it also means that it is more likely to face bottlenecks in the future.
Aligning with economic recovery from the pandemic
When the COVID-19 pandemic struck in March 2020, the global economy experienced a sharp downturn. The impact of the disease on the economy was disproportionately felt in poorer countries. The global response to the pandemic included substantial fiscal support from governments.
Throughout the early stages of the pandemic, consumer demand was resilient. However, hesitancy towards vaccinations appears to have slowed consumer spending. Businesses have also struggled to find labor to match the pace of demand. Consequently, businesses have lost 19 million jobs.
While the overall retail sales rate has regained a slight portion of its pre-pandemic level, consumer services have yet to recover. Leisure and hospitality has added 6.5 million jobs, but the number is still about 10 percent below the expected level.
Supply bottlenecks in the gold industry
Supply bottlenecks have been plaguing the mining industry for quite some time, but they have become a little less of a threat over the last few months. In fact, the Supplier Deliveries Index (SDI) posted its best number since January of 2022 shown at https://topratedgoldiracompanies.org/. Aside from a lack of demand, the mining industry is battling a shortage of high-skilled workers. Although the industry has managed to keep up with the burgeoning tech boom, retaining quality employees is a major stumbling block. The best companies are doing what they can to keep their top-notch workers happy and on the job.
Having said that, the supply chain has a long way to go. And while it isn’t as bad as it was a few years ago, the industry still has a lot of work to do if it wants to remain competitive.
China’s slowing growth and power rationing
China’s economy grew more than expected in the second quarter. Its growth rate in the first half of the year was 3.9%, compared to the Reuters poll forecast of 3.4 percent.
But Chinese officials say the recovery is still uneven. And recurrent COVID-19 outbreaks add to the uncertainty. The government has tried to ease the country’s economic downturn, rolling out more than 50 economic support measures since late May.
In the third quarter, China’s economy expanded at a faster rate than expected. Exports grew 5.7%, retail sales were up 2.5%, and industrial production was up 3.1 percent. However, real GDP growth fell.
The slowdown in economic growth is a major concern. But its growth will likely rebound in the second half of the year.
Retail investors tend to view gold bars and coins as mainly playing a wealth protection role
A survey from Bankrate found that gold ranked as the fourth most popular asset. A majority of investors surveyed chose real estate, bonds, stocks, and gold bars as their most important investments.
Buying gold is generally regarded as a hedge against inflation, but can also strengthen your portfolio. While the price of gold has been on the rise, the demand for the precious metal has been growing at an even more rapid pace.
Gold can be held in a number of forms, including coins, bars, and ETFs. It is an attractive alternative to fiat currencies, such as the US dollar, because it retains value when the buying power of these currencies declines.
The price of gold has risen in recent years to record highs in several currencies. This has constrained the market. But, in spite of this, gold has shown some promise in the last few years. Historically, gold has held value during times of economic and societal uncertainty, and has been a safe haven during economic crises.