"Undervalued asset": experts in the precious metals market saw a chance to invest in gold

The sharp correction in the gold market in recent days is a temporary phenomenon, not a change of trend, experts polled by MarketWatch believe. They see the decline in prices as an opportunity to buy on the background of softening of the U.S. Federal Reserve policy. In their opinion, structural factors, such as the growth of government debt and purchases by central banks, will continue to move prices upward in the long term. But if gold fails to hold above $3920, it could trigger a new wave of sell-offs.

Falling prices for gold analysts, whose opinion is cited by MarketWatch, call it a temporary phenomenon and a favorable opportunity to buy. According to them, the expected reduction of interest rates by the U.S. Federal Reserve creates favorable conditions for the growth in the value of precious metal, which does not bring interest income and becomes more attractive in the conditions of cheap money. Analysts recommend investors to gradually form a position in gold - both in the form of physical metal and through exchange-traded funds (ETFs) - in the amount of 5-20% of the portfolio, MarketWatch writes.

- State Street Investment Management's Global Head of Gold and Metals Strategy Aakash Doshi called the recent decline in gold prices "temporary, with a potential level for new buying around $3600-3650" per troy ounce. He believes the gold market has moved to a new, higher base level and a rise in gold prices to $5000 an ounce is more likely than a decline to $3000. "Globally, but especially in the West, I would say it is an undervalued liquid alternative asset," said the analyst.

- Sprott senior managing partner Ryan McIntyre told MarketWatch that price pullbacks are inevitable, but gold "remains well positioned for long-term growth." Global confidence continues to decline, which is driving demand for "assets that are independent of other assets and institutions," McIntyre argued. He said the unstable fiscal situation in many Western countries, especially the US with its high deficits and significant government debt, could also support gold prices in the medium to long term "as sovereign risk rises". He suggested that investors allocate 10% of their portfolio to physical gold as a strategic asset and "periodically review and rebalance the allocation so that it does not deviate significantly from the target level."

- Head of Money Metals Exchange Stefan Gleeson argues that the world is still too heavily leveraged to the dollar and not enough to gold, and the U.S. Federal Reserve's interest rate cut will keep "a favorable scenario for gold". Gleason expects the price of the metal, denominated in all fiat currencies, to continue to rise once the correction is over.

- Oversea-Chinese Banking currency strategist Christopher Wong warned: "Gold's role as a portfolio hedge against fiscal and political uncertainty remains intact, although the short-term rush has clearly been replaced by consolidation. If it manages to consolidate in the $3920-4020/oz range, it could lay the groundwork for the next leg up. But failure to hold at this level may lead to another wave of forced closing of long positions".

On October 29, gold prices stabilized after a three-day sell-off of more than 4%, consolidating at around $3950. This is due to the fact that investors started buying up the metal on the downturn before the expected Fed rate cut, Bloomberg writes.

Gold prices corrected after a rapid rally that took them to a record high above $4380 per ounce last week. Technical indicatorspointed to the fact that the rise was too strong and fast, and it coincided with a decline in demand for protective assets amid signs of progress in trade relations between the U.S. and China.

But even after the pullback, the gold price is still showing growth of about 50% this year. It is supported by purchases by central banks and investors' desire to protect themselves from the risks of weakening currencies amid excessive budget deficits, the agency notes.

This article was AI-translated and verified by a human editor