Standard Chartered believes gold price won't plunge below $1,700, how should we capitalize on it?

littlejohn16 (46)in #gold • 2 years ago (edited)

The latest news from various sources told us that Standard Chartered believes gold will stay above $1,700 even if it has a strong downtrend this year. The reason for this is quite simple, the movement and narrative around the USD are doing a lot of pressure on gold prices over the summer months, which leads to a consecutive monthly loss in August. At the same time, the USD index traded near 20-year highs, and December gold futures dropped to below $1,800 an ounce with little to no possible recovery.

Source: https://www.phoenixpropertymanagement.biz/

Suki Cooper, however, believes that the price likely won't fall much lower since the downside risk has been priced in. The precious metal analyst at Standard Chartered believes that gold also benefits from tailwinds including recession risk, a price-responsive physical market, a scaled-back positioning, and elevated inflation.

Another source of confidence comes from the possibility of the FED rising by only 50 basis points at its upcoming September meeting. Standard Chartered also believes that it will pause at the next November and December meetings. This means the FED will pause the rising hike as the US economy lose momentum in Q4-2022 while its inflation will start to ease. These fears around stagnant and slower growth with the rising risk of a recession should ease the downside to gold. Standard Chartered predicts that the gold price will get its direction from macro data, especially from the employment report, which will be out on September 2 at least in the short-term outlook.

Source: DailyFX

On the other hand, ETF exposure reveals that some ETF holders have reduced their exposure to gold over the past four months after the largest inflows in six quarters in the first quarter. Cooper believes that this reduced exposure is driven by short-term holders who hold a position on gold in the last two years, while long-term believers are not changing their position regardless of gold price.

In detail, the latest quarterly 13F filings show that around half of the biggest 10 holders of the largest gold ETFs increased their exposure to gold. More than 40 holders added their gold balance to more than 100,000 shares, while 54 holders reduced their exposure by more than 100,000 shares.

The strong beliefs from Standard Chartered should be a valuable input for investors who are looking to buy and invest in gold. While buying ETF or gold directly can be a good choice, another option is to resort to digital gold so we can access liquidity quite easily.

Digital Gold can be a good alternative for users trying to increase their portfolio on gold without looking for exposure on another ETF, or just trying to protect their own privacy for various reasons. The writer's experience with the product is also quite nice. There is no expensive fee for trading or maintenance services, easy access to liquidity to avoid being locked out of the market when we need to call necessary action, and most importantly, there is no need to think about protecting your own gold since most of the digital token are protected by a custodian.

This article is written by joniboini.

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