The price of the “King of Precious Metals” has entered an overbought zone in recent weeks. Although short-term technical oscillators suggest that the rise is overdone, fundamental factors in the form of geopolitical tensions may continue to support the price of the precious metal.
Over the course of October, the price of gold bounced back from the bottom as the conflict in the Middle East was the main catalyst for uncertainty that drove investors to the safe haven of gold. In the long term, the development and eventual escalation of the conflict, but also American interest rates, will be important for the price of gold.
These can be a significant factor not only for gold, but also for other precious metals. In general, however, gold is a relatively conservative investment, but should be a stable and integral part of every investor’s portfolio. If we look at the five-year price performance of gold, we can currently see a 55 percent appreciation (past performance is no guarantee of future results, author’s note).
Central banks increased their gold reserves last year and bought a record 1,078 tons of gold. Which way the price of gold will go in the near term will depend on a number of factors, but so far most indications are that it should remain in the green and potentially be able to break previous records.
The author is a senior analyst at Wonderinterest Trading