Despite disappointing gold price movement for most of the year, it still outperformed other major assets, while the S&P 500 has bounced off its two-year lows, the broad stock market index is down 21% over the year. Meanwhile, gold prices holding new support above $1,675 an ounce have declined by nearly 9% since the beginning of the year.

Over the course of this year, the Federal Reserve raised the interest rate five times in a row (in March by 50 basis points and four times in a row by 75 basis points) to reach between the range of 3.75% - 4%, with the aim of controlling inflation levels that reached historical levels, and despite While the Reserve Bank's aggressive monetary policy measures could maintain gold's cap during the rest of the year, it still plays an essential role as part of a diversified portfolio.

One expert believes that although interest rates will continue to rise, renewed fear of an economic slowdown could drive gold prices higher in the near term. The important measure of recession is at a 40-year high. Investors looking to hedge against uncertainty may consider the various Gold Bar Sizes available as part of their precious metals strategy. Choosing the appropriate format can enhance liquidity and flexibility in uncertain market conditions.

The US dollar has reached its peak

Last week, the yield on two-year bonds rose by more than 50 basis points over 10 years. This is the largest inverted yield gap since the 1980s and is the last time the Federal Reserve raised interest rates aggressively. Economists note that the inverted yield curve has preceded every recession since 1955.

“I don't think we need to see a complete recession but more of a slowdown in the economy for investors to see the value of gold as a safe haven,” comments one analyst. Investors will pay off their patience sometime next year."

He pointed out that the US dollar is one of the only assets that affected the performance of gold, which was weak, and the dollar continues to trade near its highest level in 20 years, supported by the Federal Reserve’s commitment to reduce inflation by continuing to raise interest rates strongly.

However, there are signs that the momentum in the US dollar has peaked and will benefit less from the Fed's dovish outlook, and as the Fed continues to raise interest rates, it is unlikely to continue to produce a stronger dollar.
Physical demand for gold is increasing

Besides weak momentum in the US dollar, strong physical demand to buy gold can also help attract new investors to the market, and it is likely that the gold market will continue to highlight healthy physical demand, specifically, jewelry consumption witnessed significant growth between July and September, according to the latest data from the World Gold Council.

Last week, the World Gold Council said on the trend in gold demand in the third quarter, global consumers bought 523 tons of gold jewelry in the third quarter above the five-year average of 500 tons, and it appears that demand for jewelry has returned to levels Before Covid-19 even as the market continued to face significant headwinds, and this just shows how strong the demand for gold was, at some point that demand would be reflected in the broader investment market.