At the beginning of last week, the price of gold rose amid a decline in the dollar index relative to most of the leading currencies. The yellow metal also rose in price due to a negative reaction from traders to the prospect of tightening the Fed's monetary policy. At a meeting of the regulator in September, it was said about the possibility of raising the base interest rate in 2022. Fed Chairman Jerome Powell said a reduction in financial asset buyback operations is planned by the end of this year.
Avtar Sandu, senior manager of the commodities department at Phillip Futures (India), believes that the growth in the gold exchange rate is a reaction to the Fed's "aggressive" position.
However, the increase in the cost of precious metal was short-lived. Already on Tuesday, quotes again dropped to 1733 per troy ounce. This was due to the strengthening of the American currency. By the end of September, the dollar stabilized against the euro and rose 0.2% to the yen. This situation made precious metal a less profitable asset for investors, so its value decreased. In addition, yellow metal quotes decreased amid rising yields on US government bonds. Treasurers is an alternative investment asset. The yield on 10-year debt securities reached its maximum value since the end of June, exceeding the mark of 1.5%. Rising bond yields reduce the attractiveness of precious metal in the eyes of market participants. Now investors want to understand how the problem with the US public debt will be resolved. Janet Yellen, the Treasury secretary, warned that the administration would exhaust cash reserves and fail to meet its obligations if Congress did not increase the public debt limit by October 18. Lawmakers are considering raising the "debt ceiling."
The collapse of the stock market is coming
Robert Kiyosaki, author of Rich Dad, Poor Dad, predicts a "large-scale stock market crash" in October this year. In his opinion, the market for cryptocurrencies, gold and silver can also suffer, but slightly. He announced his forecasts on September 25 on Twitter.
Recall that the investment book "Rich Dad, Poor Dad" was published in 1997. She was written by Kiyosaki with Sharon Lecter. This work was considered a bestseller according to the "New York Times" for 6 years since the publication of the book. In total, more than 32 million copies of the book were sold in 52 languages and in 109 countries. She was recently translated into Russian.
Kiyosaki believes that the collapse of stock markets will occur due to the "biggest bubble" in world history. He advised market participants to buy more gold, silver and bitcoins. The expert noted that he himself invests in these assets. Kiyosaki does not trust the Fed, the US Treasury Department and the stock market, so he does not buy securities. According to the expert, the ban on cryptocurrency trading in China is associated with the creation of a digital renminbi. If the Fed does something similar, then the United States will turn out to be a more authoritarian state. This may have a bad effect on the reputation of the American authorities. Many politicians and experts speak positively about China's actions to combat cryptocurrency, including bitcoin. American lawmakers, in turn, said that the policy of the Chinese authorities emphasizes their undemocracy. Meanwhile, Chinese authorities have begun active testing of the digital renminbi, and the Fed has not yet decided to issue its own digital currency. Jerome Powell, the Fed's chairman, said the central bank will soon release a report on the issue.
The gold exchange rate will rise to 3 thousand dollars per ounce
David Garofalo, CEO of Gold Royalty Corp (Canada), believes that gold is now greatly underestimated. In 1981, the yellow metal exchange rate reached a historical maximum. Then the nominal price of precious metal was $850 per ounce, and today this amount would be equivalent to $3 thousand, given the inflation of the dollar in more than 30 years. The expert believes that the yellow metal will rise in price precisely to this mark due to low interest rates and high inflation. Growth in gold demand is observed in China and India. The expert predicts that by the end of September, the volume of imports of precious metal into the Middle Kingdom will increase sharply.
Jeff Wright, vice president of gold mining company Gold Mining (USA), noted that the gold exchange rate stabilized amid the situation with the largest Chinese developer Evergrande Group. Investors are cautious about risky assets against the backdrop of a possible bankruptcy of the developer. However, the recent statement by the head of the Fed on tightening monetary policy will not best affect yellow metal quotes.
Recall that according to the London Association of Precious Metals Market Participants, the situation with gold looks quite optimistic. According to an online survey of individual and institutional investors, by the end of 2022, gold quotes could rise to $1969 per ounce.