Money is just as valuable as society perceives it to be, but as a tangible and limited resource, gold is the opposite. These unique qualities enable the precious metal to maintain and increase its value even when the paper currency valuation declines.
As a result, gold is frequently regarded as an economic indicator and an inflation hedge.
Gold’s Performance in 2022
It’s not that 2022 was a terrible year for gold since it experienced significant growth. However, it didn’t increase in value nearly as much as experts and investors had hoped.
The same economic factors that hindered gold’s growth in 2022, such as rising interest rates, the value of U.S. Treasuries increasing, a potentially strong U.S. currency, and the uncertainties regarding demand in China, which is gold’s biggest market, account for a substantial part of the concern.
But other elements affect the price of gold as well. First, the value of U.S. Treasuries increased due to the Fed’s aggressive rate hikes. It’s essential to note that bonds and gold both suffer when the price of U.S. Treasuries rises.
Rates rise when there is global uncertainty, which we saw happen all year until the end of 2022. Therefore, the demand for and price of gold declines when the dollar’s value rises, making it a safer investment.
The Precious Metal’s (Gold) Expected Performance in 2023
Despite some expected setbacks, the overall view of gold’s value in 2023 is positive. For instance, the short-term volatility of commodities makes it impossible to make any predictions.
This particular projection depends on the further weakening of the U.S. currency and a few other variables. But there are already some early indications of this approach.
The Federal government is expected to keep increasing interest rates throughout 2023, although the most recent rate hike suggested a decline in their pace. These rates likewise impact the price of U.S. Treasury securities.
It is more difficult for gold to rise in value if the dollar remains strong. Even if its price slightly declines, gold is anticipated to have an excellent year since COVID-19 limitations are finally being lifted, which would increase demand in China.
Nevertheless, we observed in December a Chinese economy that had adversely responded to the recent change in COVID-19 regulations, with firms closing their doors, workers going on strike, and many people staying at home.
Future Prospects for Gold Investments
Gold is prone to significant price fluctuations over short periods, like other stocks and precious metals. Yet, it is typically regarded as an incredibly stable and reliable investment over the long run.
When considering inflation, gold’s value hasn’t changed substantially over the long term, despite some peaks and dips, which is why it’s referred to as an ideal conservative or buy-and-hold investment.
How To Pick The Best Broker For Gold Trading
Selecting the best gold broker is as crucial as establishing your trading strategies. Below are four of the main factors to consider when selecting the best gold trading broker:
1. Regulation
It’s the most crucial factor you should consider to ensure that you only deal with a licensed broker; since it guarantees the security of your money.
2. Trading Platforms
No matter your experience level, the best gold trading broker will always provide you with various trading platforms. Multiple platforms allow you to select the one that best suits your requirements and level of risk tolerance.
3. Services Provided
The services the gold broker provides are another crucial factor you should consider.
Various kinds of brokers, including discount and full-service online forex brokers, provide international trading and the highest standard of customer support.
It’s also vital to consider factors like the minimum deposit needed to open an account, trade size, margin requirements, leverage, methods for transferring funds into your trading account, and the simplicity of money withdrawal from your account when selecting the best gold trading broker.
4. Investment Opportunities
An ideal gold broker should offer various investment options in the precious metal (gold) trade. An extensive investment option lets you diversify your portfolio and increase your investment earnings.
Therefore, consider the brokers that allow you to either purchase gold directly or invest cash into mutual funds, ETFs, or gold futures and options.
Final Remarks
A balanced portfolio includes investments that are both conservative and risky. Long-term ownership of a safe precious metal like gold can be a smart way to balance risky investments in your portfolio’s equities.
