As the dollar soared, gold fell to a six-month low, falling 1.9% to $1774.26. By contrast, the Bloomberg dollar spot index rose 1.1%, while other precious metals such as silver and platinum fell.

The strength of the dollar was largely driven by fears of recession as investors worried that the Fed's rate hike would lead to a continued downturn in the economy and buy dollars instead. The depreciation of the euro also helped the dollar.

Despite the current decline in the price of gold, gold remains an ideal safe haven for investors to seek a safe haven. Here are three reasons why gold has strengthened in the long run.

No one knows how to fight inflation effectively.

Last month, Lawrence Summers, a former US Treasury secretary, argued that unemployment must be raised to fight inflation. But there is no hard evidence that unemployment is a panacea. Even if it does help curb inflation, it has huge costs of its own. The Biden administration points out that natural gas companies are generating record profits but are keeping gas prices artificially high. Even as natural gas prices fall, supply chain problems are still driving prices up, not to mention the ongoing ground war in Europe, which is positively affecting several key global resources, including food.

At the same time, the successful record of plotting a "soft landing" by raising interest rates to reduce inflation without plunging the economy into recession is not honorable.

All this suggests that inflation is likely to continue for some time, and that some of the solutions proposed now may be poison pills that lead to future uncertainty. As a safe asset, gold will perform well in the future.

The long-term prospect of gold is good.

Some investors focus on the short-term environment and conclude that gold has an unstable foundation. But investors such as Manoj Kumar Jain, head of commodities and monetary research at Prithvi Finmart, see an opportunity. "normally, gold is seen as a hedge against inflation and economic downturn, but this time, the situation looks different. In the coming quarter or so, gold prices are likely to fall to the level of $1750 to $1720 an ounce. " He pointed out that gold could reach a new high and break the $2000 mark in 2023.

Given the sharp deterioration in economic activity, the Fed may suspend its tightening cycle or even shift slightly to a dovish stance, which could put pressure on the dollar and lead to lower overall interest rates on the Treasury yield curve. Sugandha Sachdeva, vice president of commodities and monetary research at Religare Broking, said, "this situation may be conducive to the flow of gold, leading to a strong rebound in gold prices."

The historical advantage of gold is that at the last minute

Historically, gold prices have risen sharply in the second half of inflation. That is why gold and gold miners flourished during the worst period of stagflation in the 1970s. Today's low gold price provides a potential buying opportunity for investors, as gold is likely to rise in the future as economic uncertainty becomes more chaotic.

Investors can invest in$Sprott Physical Gold Trust (PHYS.US) $Buy physical gold, or through$Sprott Gold Company ETF (SGDM.US) $或$ALPS Sprott Junior Gold Miners ETF (SGDJ.US) $To invest.