Gold prices have been moving sideways for a while now after a stupendous rise in 2018 and 2019. In the past seven months gold prices have reduced by 6.4 percent. However experts still suggest that gold should be an essential part of your portfolio. Here are some of the reasons why you should invest in gold market this year -
#1- Low Interest Rates
Due to high inflation rates, fixed income investors are looking out for high interest rates in order to protect their purchasing power. However the current environment calls for low interest rates. And the situation is expected to be the same for the next few years. This leads to situations of low or negative interest rates.
Due to low interest rates, some investors find gold as an attractive investment opportunity. Also gold acts as a hedge against inflation risk.
#2. Existence of Geopolitical Risk
The COVID-19 pandemic has increased geopolitical risks between the countries. The geopolitical tensions and trade wars have increased the uncertainty between various nations. This has led to fluctuations in the gold market.
Investors are hedging their investment against gold. However it is important to look out for the uncertainties that exist in this market. Gold trading signals will help you to get all the important information related to the market and make a secure investment.
#3- Stock Markets are Overvalued
Over the past few months investors have seen a handsome gain on equity investments. However now the fear of possible correction in the stock market is playing on their minds as the valuations are steep. Even during the crisis, markets remain high and stocks are overvalued.
Since gold has a negative correlation with the stock market, it is a good idea to invest in some gold. This will help you to get average returns even if the overall portfolio goes downside. Investors are also looking for gold market consultation in order to hedge their investment against the stock market risk.
#4. Good Way to Save Money for Future
During an economic slowdown, the stock market remains quite volatile and uncertain. The present situation has increased geopolitical tensions between various countries. Future of various big business organisations remains uncertain, making investment in the stock market quite risky.
At such times, gold holds its value even when the financial hard times hit. There is quite stability seen in gold prices even in geopolitical tensions. People tend to seek shelter when world power collides. During such times gold investment generally outperforms other investment options.
But at the same time we recommend you to subscribe to gold signals in order to invest in the market at the right time.
Financial planners usually never recommend gold for high returns. But the timing for entry and exit is an important factor for safe investment.