Gold trading in 2023: Is now a good time to invest?
By Paul Reid
23 January 2023
Are you thinking about investing in gold in 2023? With the increasing financial uncertainty around the world, many traders are looking to gold as a safe-haven asset. In this article, we’ll take a look at the XAU big picture and what will be driving prices in 2023.
Overview of gold charts
Gold has been surging lately, getting close to the all-time high of August 2020. So, is now a good time to invest in gold? First, let's review the gold price landmarks of the past few years.
The 2009 recession fueled gold trading volumes, and by 2011, XAUUSD hit a high of $1,823.
As world economies got on the road to recovery, fiat currencies regained strength, and gold prices fell throughout 2013–2014. The bearish trend bottomed out at $1,061 in 2015, before beginning a gradual climb. Gold prices surged again in 2019 as Covid ravaged nations, reaching $1,974.
Is gold still a safe-haven asset?
When times are tough and the economy is struggling, gold prices tend to go up. This makes gold a good investment for those looking to protect their wealth during uncertain times. Gold can act as a hedge against inflation. When inflation is on the rise, XAU usually rises too.
Gold is scarce, which is another reason experts see gold as a good investment, no matter the year or economic health. There is only so much gold in the world, which means that its price will continue to go up as demand increases. Electronics rely heavily on gold, and that’s not changing any time soon.
This makes gold a good long-term investment, but traders can also enjoy a rise in the short term.
Despite recent fluctuations in the market, gold remains a stable investment, and some experts believe that 2023 Q1 is a good time to trade or invest in gold. They believe that gold and other metals will continue to be a safe haven asset throughout the year and hold its value.
Global interest rates are expected to rise in 2023, as the economy continues to recover from the pandemic and, more importantly, prepare for a possible recession. Higher interest rates are a treasury’s defensive mechanism when recession looms, which typically leads to higher gold prices.
A recession can also lead to a shift in investor sentiment. During the 2009 financial crisis, gold prices spiked as investors sought safety from the volatile stock market, and there’s no reason to think 2023 will be any different.
Some experts warn that gold prices are too volatile and could first drop significantly in the coming months. If you're considering trading in gold, it's important to weigh both sides of those arguments before making a decision.
If you are looking for a safe-haven asset to protect your portfolio from market volatility or even hedge inflation, then gold may be a good option to look at. You may want to wait for gold prices to stabilize before investing, as they are already very high.
Ultimately, the decision to invest or not should rest with you and your financial situation. Past market behavior does not guarantee a repeat, and volatility could threaten low equity accounts using high leverage. Trade smart. Choose your entry point with the help of economic releases, fundamentals, and technical analysis.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.
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