Gold Has Lost Its Shine! Prices Fallen Badly! Is it Recovering?

[00:00:00]Ladies and gentlemen, gold has lost its glitter as we see gold prices come crashing down. More importantly, analysts that has been predicting the gold prices to go to the moon right now has mellowed down their expectation. So, I think it's very important that we re-look at the story of gold and the expectation where the gold would be at the end of the video. So, please watch till the end of it. So, gold prices have done what we call a great reset. If you were to recall gold prices went to the moon and everybody thought that gold price would suddenly be going up and up and up. Well, it didn't turn that way because from the peak of 5,600 or so in January this year, it has come crashing down to 4,000 points as at yesterday and more importantly, it has come down by 27%.

[00:00:58]So, all the gains of 2022 were lost and how bad would it go? I think this is the question right now. As usual, these are my usual disclaimer that this is really for education purpose, not financial advice and gold prices is really difficult to predict and I wouldn't be predicting it myself, but let's take a look at what other people, the analysts and experts are predicting. So, let's recall what are the things that help gold prices to go up and what people were expecting uh help to help the gold price to go up. So, I think there is a unanimous consensus that the central banks is pivotal to the entire gold demand. Uh so, central banks across the world have been accumulating gold in a big massive way and by the way, they are still buying as of June and this demand remains intact. Now, everybody is all worried about de-dollarization and US dollar losing its tier one status.

[00:02:03]So, everybody in the fear of that is also accumulating gold. So, that's not just central banks, but also big institution, etc. And there's also a fear that US would certainly go into some rumbling in their financial market because they've just accumulated too much debt. And their fiscal deficit is is something that's astronomical. So, these were the things that has brought the gold prices up and potentially could bring it higher.

[00:02:36]Unfortunately, right now, there are three other points that help me that actually cause it to go down. Number one is that the Federal Reserve is no longer expecting to cut interest rate, and in fact, there's a case that interest rate could go up. And the US dollar weakness uh that they previously thought of is not happening. The US dollar is strengthening.

[00:02:58]And of course, uh there's also a stock market rumbling as well. So, all this happening would actually weaken the bull case for gold prices. So, let's uh talk about uh gold. So, the central banks were were previously looking at the USD as a proven political asset. Unfortunately, the US have actually used some of the political pressure to clamp down on some countries' assets in US.

[00:03:32]So, many country's central bank suddenly realized that their belief in US asset uh as a safer asset uh is quite shaky, but and their position in in US uh could be politicized. So, so they are now diverting these assets into gold because gold is a safer asset. And of course this also have a second effect which is de-dollarization, loss of tier one status, meaning that right now the US dollar is losing its trust across the world. It's not they will be completely de-dollarized because there isn't a second asset that can be used to replace the US dollar.

[00:04:18]But suddenly this is a threat and many people are now moving towards gold. And third of course is the big fiscal deficit of US and the debt is growing bigger and bigger and people are just being afraid. So putting a bet on gold is a safer approach for these reasons.

[00:04:36]But I will just go very quickly. The expectation of US interest rate that will be cut is no longer the case because of the Iranian US war. So prices are going up so there could be a case where interest rate may even rise. And if that happened then we will have the gold prices coming down. And the US dollar which everybody thought that will continue weaken is no longer weakening.

[00:05:04]It's now strengthened and because of that you know gold has lost its value and the stock market of course is doing well in US and that has a substitution effect for gold as well. Now let me give you the actual table and this table is very important. So these were the institutions that make gold prediction earlier this year. So JP Morgan predicted that 1 oz of gold will be $6,300. Right now it's $4,000 USD. So they had earlier predicted your gold to $6,300. That was in February. Deutsche Bank $6,000, USB $6,200, Morgan Stanley $5,700, Goldman Sachs $5,400, ANZ Bank $5,800, TD Securities $5,400, Metal Focus 5,000, ING, 5,000, Citi Bank, 5,000, Reuters, Oh, a grow analyst, it says around 4,007 to 4,009.

[00:06:00]All of this seems too far away right now. All these were predicted in the first quarter of 2026. So, right now, since June to July, many of these analysts have changed their opinion. And what is the new forecast is where I will bring you now right now.

[00:06:18]So, UBS right now is looking at 3,008 to 4,000 near term. That means from where it is now, it could have gone down even further. Although they say that most likely in 12-months time they recover 5,002. Goldman Sachs, 4,009, Bank of America, most likely 4,003, Deutsche Bank, 4,003, in quarter three and maybe even hit 4,008 in quarter four, but they say it's possible to hit a floor of 3,008.

[00:06:47]Metal Focus, 4,009, JP Morgan, 4,003 to 4,004, ING Bank, 4,006, and DBS, 4,000, which is where it is right now. OCBC Bank, 4,003, HSBC Bank, 4,005 for this year. And you notice most of these averages are still higher than what the price right is right is right now.

[00:07:13]But, I would say that they are a lot more humbler than what was previously projected.

[00:07:19]And does it mean that, you know, this is a time that maybe give us some confidence? Well, no, because there are a few of them actually predicted that it might even go lower. So, the spread of the prediction is quite wide. So, I think the biggest worry is where the Federal Reserve will go. So, if the Federal Reserve will cut the interest rate, that'll be great. Gold prices will shoot up.

[00:07:42]Unfortunately, I don't think anybody is making that prediction anymore. And there are many analysts that even say that all the possible rate cuts are gone. And more importantly, there might be even a case of increase in interest rate. So, gold has no dividends, no interest earnings, no no returns in any way except to capital gains. So, if you hold gold itself, apart from it looking good, uh it really have no tangible value. So, the case of holding alternative asset gains and returns is higher. So, the other case is the US dollar. Right now, the US dollar is strengthening because there's a belief that interest rate might even go up. So, if the US interest rate go up, then there's a lot more demand to put money into US denominated savings. And this is what we call hot money. So, if that's the case, then we'll be looking at even possibility of the US dollar not just remaining stronger, but going even stronger. If that's the case, then gold prices will continue to weaken. Now, fortunately for gold, all the central banks are still buying gold, especially China, buying gold in a big way because they have no faith in the US treasuries anymore.

[00:09:00]And right now, they are looking as an alternative uh towards the US dollar and US denominated asset.

[00:09:09]Uh and there's a lot of analysts remain very bullish about gold in the long run.

[00:09:16]I'm not talking about just the next few months, but in 1 year, 2 years, 10 years, that kind of thing. And the history of gold actually supports this view because gold prices always go up in the long run. If we were to cluster some of these predictions of gold prices, there is a 4-tier bearish low, medium, high.

[00:09:40]And the bearish one would be companies such as UBS and DBS. Says that from where we are, it's possible go down between 3,008 to 3,000 to 4,000. Now, the low expectation, 4,300 to 4,600.

[00:09:54]That's the middle cluster, JP Morgan, OCBC, Bank of America, HSBC and ING.

[00:10:00]Now, there's a medium cluster, Deutsche Bank, Goldman Sachs, uh Metal Focus and Reuters, they are predicting you'll go between 4,000 to 4,009. This could because that's almost 20% from where it is right now.

[00:10:14]And the high cluster, which which I've got no view whether they were ever ever come for this this period, uh is that you'll go to 5,000 to 5,002. Seems too far from where it is right now. And that's of course Wells Fargo's, uh still smoking weed thinking it'll go to 6,000 to 6,003. So, you can see that the spread is very big. And it's very difficult for us to come to a landing.

[00:10:38]But certainly, there are more believers that you'll go up than to go down. So, what's the bull case? Well, the bull case actually says that if US and Iran could come to a settlement, then maybe the chances of a interest rate hike will go down because inflation won't rise.

[00:11:01]And of course, uh that will help stocks and shares also to recover better.

[00:11:06]And that will probably cause gold prices to to go to reasonably well at 4,009 to 5,002. But in the event that the war continues and oil prices goes up phenomenally, and it is still going up because right now, not just the Strait of Hormuz is being shut down, the Bab el-Mandeb also shut down for Saudi ships. So, actually, oil prices are going up, and that could further lead on the inflation, which then the further lead on to a interest rate hike. And if that would happen, that would be very bad for gold prices, which will settle lower than 4,000 right now. Now, the base case, which is right what most people are expecting now, is from where we are right now, maybe go up 10% to 15%. Is that oil prices will kind of stabilize at a not too high, not too low level, but inflation won't climb. And if that were to happen, then this where it is.

[00:12:02]So, again, right? You can see the disparity, difficult to predict. My view My view is that I think the gold is a good asset for diversification. And gold do compound over a long period of time.

[00:12:16]Short period is kind of difficult, okay?

[00:12:18]They compound over a long period of time. We're talking about 10, 15, 20 years. So, if you've got too much stocks, too much property, too much cash, maybe gold is an a good asset for a long period of time. But most people don't like to look long, they like to look short-term.

[00:12:35]Uh so, I think that gold is a good alternative to help us spread out our risk.

[00:12:40]But in the short run, we must expect gold prices to have a lot volatility.

[00:12:46]Gold does not glitter.

[00:12:49]And and when I say gold does not glitter, means that you'll go up forever. A lot of people just believe last year that, "Wow, gold go up." Since the recon of like 60%. Well, everything that goes up will have a chance that you'll come down. So, I would take a more conservative position. So, let me hear your view.

[00:13:08]I think that gold a good alternative as a diversifier, but not a good mainstream investment tool. So, let me hear your view in whether you think gold is a good asset to go in right now, or you're going to keep far away from gold, okay? So, I'll see you on my next video or live stream. Bye-bye.