New Year, Different Outlook for Precious Metals
Posted on December 26, 2022 in Investing by barley
The New Year is coming and there are many reasons to stock up on gold and other precious metals before the year ends. Some of these reasons include the economic outlook, geopolitical events, and the restocking of inventory. However, no matter what the future holds, one thing is for certain: Gold and other precious metals are always in demand.
Gold had a good year in 2022. Despite a plethora of global economic worries, the yellow metal started the year off on a solid footing. However, gold prices dropped over the course of the year and did not break through to the stratosphere in any meaningful way.
Inflation remains high and could continue to eat away at the value of a number of commodities. That doesn’t mean gold is in a good position. Ultimately, gold’s price is expected to drop by six percent in 2023.
There’s a bit of a disconnect between the speed of interest rate increases and the inflationary pressures they’re supposed to alleviate. If the Fed hikes rates too quickly, it could exacerbate a slowdown in the economy. And, if inflation is too persistent, it can damage a country’s long-term financial health.
The palladium market swung into surplus in 2020, but it appears to be reversing its course in the new year. However, a lack of supply-side reasons to believe that the market will remain in deficit are likely to hinder the metal’s bullish outlook.
Palladium’s main industrial use is in catalytic converters for gasoline engines. But this is only a small portion of the total demand for the precious metal. It’s important to note that this demand is cyclical. If the global economy improves, there will be an acceleration in catalytic converter production, and thus an increase in automotive scrappage rates. In turn, this will limit the growth of industrial demand.
Meanwhile, the auto industry has been struggling in the U.S. and Europe. But it is gaining momentum in China, where auto sales are rising. Nevertheless, it remains to be seen how long it can sustain the surge.
In a world of negative real rates, where currencies have become unattractive investments, precious metals remain a safe haven. They also help to lubricate an economy in the recovery phase. However, the economic recovery needs to be managed carefully with plenty of investments in precious metals like these preciousmetalsiracompanies.org.
A weaker dollar index and aggressive Fed rate hike expectations have negatively affected gold prices. This is a sign of global stagflation. Gold will likely be more volatile in the next year.
The Fed may raise interest rates more than expected, a factor that could keep markets volatile. It is also possible that the economic recovery will be slower than expected. Nevertheless, the economic outlook for gold remains positive.
A robust recovery in metal supply will help to reduce the fundamental deficit. Demand is also projected to increase.
If you are looking for a way to diversify your portfolio in 2022, it’s time to take a look at precious metals. In particular, gold. Despite the shaky start to the year, the yellow metal is set to be one of the best performers in the year.
The price of gold is expected to hit new highs in 2023. With the price of oil in decline, global supply growth is likely to slow down in the coming year.
OPEC is expected to cut 9.7 million barrels of oil per day in April 2023. Meanwhile, world oil supply growth is projected to slow down to 0.5 million barrels a day in 2024. OPEC is also expected to need more crude. This will cause a sustained recovery in base metals prices, which is projected to continue in late 2023.
Restocking in advance
Efficient inventory restocking is critical to the success of your business. Failing to replenish items in stock can be a major source of lost sales. It also presents a risk of tying up capital in dead inventory. A surge in demand can cause items to become unavailable.
There are several ways to optimize your inventory. For starters, you can take advantage of the newest technologies to improve the efficiency of your restocking process. One of the most effective methods is to make use of demand forecasting software to determine the products that will best serve your customers.
Using this information, you can develop a restocking strategy that will boost productivity, improve your competitiveness, and reduce costs. Another smart move is to use an inventory restocking tool like SoStocked. This tool allows you to prioritize products, measure product velocity, and set restock limits.