Economist: bankruptcy is the most important reason for the rise in gold prices

Dr. Ashraf Ghorab, an economist and vice president of the Arab Union for Social Development in the Arab Action System of the League of Arab States for economic development, said that the increase in gold prices during the current period, both globally and locally, is mainly due to the bankruptcies and closures of three American banks, the most important of which Silicon Valley Bank, then Signature Bank, and before them was Silvergrit Bank, explaining that its bankruptcy caused a state of fear and anxiety among investors to continue investing in the dollar, and they found that the safest and best alternative is investment because it is not exposed to sudden and rapid collapses, as happened in the banking crisis and the loss of all money Once .

Reasons for the high price of gold

Ghorab added that the fourth banking crisis occurred in Europe, when the Swiss Credit Suisse Bank was exposed to a major banking crisis and its shares plunged, which increased fears of the spread of the collapse of European banks, and this led to a decline in the European banks index to 6.9%, which is the largest decline in more than a year. He explained that this was followed by a decline in the yield of European and American bonds, and this led to an increase in the demand for investment in gold as a safe haven in the financial markets, especially after the exit from investment in the bond markets and the trend towards gold.

US Federal Bank

Ghorab advised investors and individuals not to sell gold during the current period, because it may witness a rise in prices during the coming period, especially after the crisis that American and European banks were exposed to, indicating that the crisis indicates the direction of the US Federal Bank to two possibilities, the first of which is to raise interest by a very small rate. It may reach 0.25% or less than that, or it may resort to stabilization temporarily in the event of increasing pressure on the banking sector, and this means that it will ease its monetary tightening policy, and this confirms that the demand for investment in gold will increase, and this indicates the possibility of a rise in its price globally and locally.

Demand for investment in gold

The economist continued, that with the increase in confidence in investing in gold and the increase in bankruptcies of banks and startups in particular, especially after they suffered losses from the collapse of the Silicon Valley Bank, which was supporting and financing them, explaining that startups were considered a safe investment for investors, in addition to that with The global economic crisis, which affects investments, so investors tend to increase their purchases of gold in order to compensate for its loss, explaining that the current increases in gold are temporary increases linked to sudden factors, but there are real increases that are higher than that during the second half of the current year after June, especially after the Federal Reserve The American decision to reduce the interest rate, so that gold is a safe haven to invest in.

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The article is in Arabic

Tags: Economist bankruptcy important reason rise gold prices