First for gold – The price of gold will rise. The US national debt also has a significant impact on growth

First for gold – The price of gold will rise. The US national debt also has a significant impact on growth
First for gold – The price of gold will rise. The US national debt also has a significant impact on growth

The unusually strong demand for gold by the central bank and the private sector in the last two years has increased the price of gold. The market broke records and twice crossed the magical threshold of two thousand dollars per ounce. According to the experts, it’s just an arrest.

Estimating the evolution of the gold price is not easy. But it is certain that if the demand grows, the price of the precious metal also increases. In recent years, it has dramatically influenced the Massive gold purchases in the last two years have completely changed the gold market. nsk People’s Bank bought a record 735 tons of gold in 2023, currently it could mine five thousand tons of gold. In addition, when the real estate sector began to collapse at the end of 2021, the attention of private investors was first focused on cast iron. sure, private sector gold imports abroad reached a total of 1,411 tons in 2023 and a high of 228 tons in January of this year alone, pointed out Roman Pilek, economist and co-founder of Zlat rezervy.

The main reason for the increase in gold prices is the strong demand from central banks. Russia, India or Turkey are among the top buyers of the most expensive metal. Gold is a store of value in times of economic and political uncertainty. The central banks are of course aware of this and constantly increase their gold reserves, especially in view of the frozen Russian foreign exchange reserves. The First National Bank continues its intensive purchases of light metal even in the summer. In the last non-new week, the increase in the price of gold by one percent within one hour was seen repeatedly during the morning time of the London fixing, which is not usual at this time. It is important that the large buyer of wood does not have the historically highest price, said Roman Pilek.

Uncertainty about the development of inflation and foreign policy is rising, which is also driving up the price of gold. The value of gold has risen with small fluctuations since the end of 2019, when the coronavirus pandemic began. Subsequently, the price of gold died out due to the conflict in Ukraine and the subsequent high inflation. Now we have events in Israel, to which gold reacts with growth again. In the fall, the presidential elections in the USA will take place, which may change foreign policy and raise the price of gold sharply again. Moreover, the US national debt is growing unstoppably, which indicates that the fight against rising inflation is far from over, the economist mentioned.

According to Roman Pilek, the price of gold develops in eight-year cycles. At the end of it, she could be worth 70 thousand crowns. Let’s start from the long-term dates since 1973, when the first eight-year cycle began. We are currently in roughly the second year of the seventh cycle, when at least during the first half of the cycle, and with small fluctuations, the price of gold rises. In the last 14 months alone, the stock exchange price of an ounce of gold rose from 40,000 to a price of 53,000 crowns. The Czech koruna thus lost 33 percent of its value. According to my forecast, an ounce of gold will reach a minimum price of 70-75,000 crowns in 2027 and 2028, which is another +40 percent. From a long-term point of view, the price of gold is relevant and its rocket growth is only at its peak, concluded Roman Pilek.

The article is in Czech

Tags: gold price gold rise national debt significant impact growth


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