As one of the true long-term investments for the future of all investors, gold is still a great commodity for any portfolio. As any financial planner will tell you, gold is a safe haven for anyone looking to diversify their portfolio or improve their overall returns. In the past few months, gold has been in a bullish pattern as seasonality and fundamental considerations come into play.
In recent months gold has seen an increase in demand due to seasonality in the market, as well as from longer-term fundamentals such as debt levels, currency appreciating, and inflationary pressures. As investors become more focused on long-term goals and the sustainability of their investments, gold is the perfect asset to take advantage of the factors that are driving the prices up.
As seasonality in the markets picks up, and fundamentals become more important, gold has been one of the best-performing assets. Gold is a safe haven in times of economic or political uncertainty because it is one of the few assets that does not change in value with the stock market. For example, gold ETFs such as the SPDR Gold Trust, have seen strong inflows in 2021 due to a safe-haven demand for gold as investors become more cautious in their investment decisions.
An additional factor that is driving gold higher is the appreciation of the US Dollar. As the US Dollar appreciates due to vaccine news and fiscal stimulus, gold prices are pushed higher due to a weaker US Dollar, which makes gold more attractive for international investors.
Inflationary pressures are also a factor that is pushing gold prices higher, as investors look for a safe-haven asset to diversify their portfolios and hedge against inflation. Gold is seen as a hedge against inflation as it is usually priced in US Dollars, which gives investors protection against further devaluation of their currency.
Lastly, debt levels have been rising over the past year, and are expected to continue to do so over the next few years. Gold is seen as an ideal asset to invest in in high debt levels as it is seen as a hedge against any increase in debt levels and potential difficulties in paying it back.
All-in-all, it is clear that seasonality and fundamental considerations are converging on gold and making it an increasingly safe-haven asset for investors. Gold is a great long-term investment that offers investors protection from economic and political uncertainty. It is a great asset for diversifying a portfolio and safeguarding against any future uncertainty.
