Gold price predictions for next 5 years: Will gold continue rising?
Gold prices reached near-record highs in May, peaking at the $2,067 point, a milestone not achieved since March the previous year. The most recent surge was fuelled by the unsettled negotiations over the US debt ceiling. Janet Yellen, the Treasury Secretary, cautioned that the US economy is in danger of exhausting its cash reserves as soon as the start of June.
Prior to this, the gold prices were buoyed by investor unease stemming from turbulence within the banking sector. This anxiety was primarily incited by the collapse of Silicon Valley Bank and the subsequent acquisition of Credit Suisse by UBS (UBSG), which rattled investor confidence.
Short history of gold
Gold was first discovered by Ancient Egyptians over 4,000 years ago. Throughout centuries the precious metal was used as a store of value and showcase of wealth. In the modern day and age, gold’s demand has expanded to industrial use, most notably in production of electronics.
As with many commodities, gold’s price is highly influenced by the forces of supply and demand. Yet the yellow metal is also seen as an investment asset, preserving value throughout centuries. Some investors believe in its safe-haven quality and use gold to hedge against inflation and economic uncertainty.
Gold is denominated in US dollars, which means the precious metal has an inverse relationship with the greenback. The USD strength against other currencies hurts the price of gold as it becomes more expensive and hence less attractive for overseas buyers. Conversely, when the USD is falling in value, it fuels gold demand.
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