o3 BLOG | investissements
Les perspectives de l’or au 3e trimestre de 2022
Gold’s outlook for Q3 2022 and the summer stock market crash – We recently published a post on the possibility of a stock market crash in 2022 and how to prepare for it if applicable. While stock market fluctuations are common, full crashes are rare and very distant in time. However, last May saw investors experience the worst performing market in years, and experts are predicting even lower lows in the months ahead. Although gold experienced a pullback in the first week of May, it presented an excellent buying opportunity for investors. Traditionally, when inflation and the threat of a market crash loom, gold is a safe haven to protect a portfolio.
As markets shift into bearish mode, technical analysts at Bank of America believe gold will hit all-time highs this year, and we can expect improvement on a month-to-month basis as the stock market remains choppy. All things considered, including the strength of the US dollar, the value of gold remains stable.
Q3 2022 Gold Outlook
Investors believe gold is poised to hit $2,000 very soon. Although it approached a bottom price last May, when the precious metal crosses the $2,000 mark, the probability of it going back down will be very low.
The main factors influencing the price of gold in the 3rd and 4th quarters of 2022
Supply, demand and investor behavior are the main factors that influence the price of gold. With economic uncertainty and falling stock markets, investors are turning to gold as a hedge in their portfolio. The following elements will influence the price of gold during the second half of the year:
- Supply and demand
People are increasingly interested in investing in precious metals such as gold, especially in times of uncertainty. As the world recovers from a pandemic and geopolitical conflicts still loom, investors are turning to gold stocks to diversify their portfolios.
- Economic policies
Interest rates and other financial policy decisions also play an important role in driving up the price of gold. However, with lower opportunity costs, more investors view gold as a safe asset. In contrast, investors are more likely to invest in the stock market if the opportunity cost is high. Given the current health of the stock market, investors still view gold as the primary safe haven.
- The demand for gold jewelry
Specialists predict an increase in demand for gold jewelry, in line with the economic recovery after the pandemic. Countries like China and India typically see a spike in gold consumption after summer, in anticipation of cultural festivities and wedding season.
- Supply chains and scarcity
Due to supply chain concerns, global inflation and rising energy prices, gold bullion products benefited from scarcity during the global crisis. Market experts say the safe havens of gold bullion and gold stocks have pushed up the price of gold.
The summer slump of 2022
Aside from inflation, U.S. Federal Reserve hikes, and geopolitical turmoil, the stock market tends to slow during the summer months. Known as the “summer slump,” this market lull is primarily tied to consumer vacations. This slowness can be observed in all sectors and affects both small and large companies.
Traditionally, poor market performance due to the summer stock market slump occurs between May and September. Since 1926, stock market returns during this period have been up to 45% lower than during the rest of the year. This 90-year period includes the stock market crash of 1929-1932, which marked the beginning of the depression of the 1930s. Many investors are all too familiar with the adage, « Sell in May and walk away. » »
Even when seasonal patterns seem dominant in the historical record, they can reverse depending on current events, such as a pandemic. Most seasoned investors know that the slump is temporary. However, investing in defensive stocks that the gold exploration sector may offer the best protection against economic downturns or summer market lulls. Although many sectors are vulnerable to market fluctuations, gold follows an opposite trend. To meet the demand for gold, a company must produce it, hence gold stocks are considered wise investment decisions.
Q3 2022 Gold Outlook: Key Takeaways
Despite the political uncertainties and rate hikes, many specialists believe that gold will regain the upper hand and reach a new high during the year. This view seems prevalent due to concerns over global interest rates and anticipation of higher oil prices. For many investors, the goal this year is to accumulate stocks of high-quality junior gold mining companies in order to capitalize on the next big breakthrough.
When investing in stocks of gold mining companies, look for well-established companies with capable management teams and clear plans outlining how they intend to achieve their financial goals.
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