What to Invest in This Year; Gold or Dollar?

Investors evaluate the results of surveys conducted every year; Gold or dollar for investment in 2020? Gold or dollar for investment in 2021? Gold or dollar for investment in 2022? We have compiled the answers to these questions for you.

What to Invest in this year? Will the star of this year be gold or dollar? Some analysts point to the gold for the question. Gold and dollar prices record an inverse proportion. For example, when the dollar falls because the unit value of ounce of gold is charged in dollars, those who invest in dollars invest more in gold to protect the money they have. While gold rises as the dollar falls, there is a direct correlation between the dollar and oil. According to 2016 data, the US has 72% gold reserves. But not only in the US but all over the world, gold is a safe investment tool for people. Due to risks such as inflation, investors turn to gold as a safe haven. Therefore, the state of gold attracts the attention of the whole world. Interest rate policies, political developments and monetary policies of central banks are among the factors that affect gold prices. We can predict when gold prices will rise and fall from these data. Some analysts predict the price of gold by looking at the value of the dollar. In recent days, markets have priced in a more aggressive tapering schedule by the Federal Reserve next year, plus potentially at least two rate hikes, leading to a stronger US dollar index. The US dollar index is at 96 and is putting pressure on gold.

"The dictionary meaning of "tapering" is gradual reduction. In economics and finance, it means that central banks gradually reduce the pace of their large-scale asset purchases."

Since the Covid-19 pandemic, the dollar index has risen significantly. However, analysts now predict that the trend of the markets will be towards gold. According to their assessments, while the dollar index maintains its current swap range, the gold market will become a bull market. In August 2020, gold recorded a record high. The US dollar is expected to enter into a very stubborn competition with the Euro this year. While the economy has been recovering in the Eurozone in recent months, it is stated that the ECB is on a harmonious path in line with the global economy. The Euro has the largest share in the US dollar index and Europe is in a better position than the US economy. According to these analyzes, the Euro is expected to rise further against the US dollar. According to the sentiment analysis in the markets in the US dollar-gold duo; It is stated that gold is experiencing its potential performance at a better level. When the developments in the gold market in recent weeks are interpreted, it is noted that there is a downward trend in gold. As a result of the effects of inflation being more evident on a global scale, this situation strengthens the possibility that gold may experience an upward movement in the medium term. It is stated that the US Federal Reserve's acceleration of the tapering process and the fact that they will raise interest rates at least twice next year will not help real yields get out of the negative area. Gold is likely to be an investment instrument that will benefit from this environment. The main factor suppressing gold this year has been a strong US dollar index. We can also add to this the announcement to the markets that an interest rate hike was imminent. But it seems that the main drivers for gold next year will be negative real yields, inflation expectations, the general upward trend in gold and an even weaker US dollar index. The general view of analysts and economists is that gold will definitely outperform next year. The investment information, comments and recommendations contained herein are not investment advice. Investment advisory services are provided within the framework of the investment advisory agreement to be signed between brokerage houses, portfolio management companies, non-deposit taking banks and the client. The comments and recommendations contained herein are based on the personal opinions of those making such comments and recommendations. These opinions may not be appropriate for your financial situation and risk-return preferences. Therefore, making an investment decision based solely on the information contained herein may not produce results in line with your expectations. Sources

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