On January 11th, 2023, the Center for World Studies (CWTS) UGM held the first volume of its Sarasehan* of Democracy bringing “Cross Order Democracy Discourse” topic at Fisipol UGM’s BRI Works Amphitheater. The event featured several experts as guest speakers, including Major General TNI (Purn) IGK Manila, Head of PSPD UGM Dr. Riza Noer Arfani, and Bagas Damarjati, who represented the UGM students.

Discussions commenced with a presentation from Major General TNI (Purn) IGK Manila, who emphasized the important role played by academics and universities in shaping the ideal narrative of democracy. The Major General suggested that academia’s strength are well suited for provisioning advice to politicians, rather than engaging in the practical aspects of politics 

Dr. Riza Noer Arfani was the next to speak. During his presentation, Dr. Riza conveyed that because Indonesia’s democracy remains relatively new there are bound to be challenging periods. Therefore, Indonesia requires its academicians and universities to engage in the democratic process by shaping a vision of ideal democratic practices in Indonesia.

The discussion then progressed to the importance of Indonesia’s students in helping to construct democracy’s narrative in Indonesia. Bagas Damarjati stressed the importance of this to democracy, noting that more could be done to accommodate the aspirations of Indonesia’s students.

Following guest speakers, a question and answer session was held to generate further discussion. Guided by PSPD UGM Researcher Mario Aden Bayu Valendo, this session provided an opportunity for the audience to share their own ideas and ask questions of the guest speakers. While the event was held offline, it was also broadcast online via Instagram Live. To view the recording, please visit the Center for World Studies’ Instagram account @CTWSUGM.

* Sarasehan (in Bahasa) is a semi-formal type of discussion between experts and audiences upon certain issues. 

Currently, the implementation of circular economy has gained more attention in Indonesia.  In fact, Indonesia has incorporated the circular economy concept into the vision and development strategy of the five priority sectors in Indonesia's 2020-2024 National Medium-Term Development Plan (RPJM). The implementation of circular economy aims to balance economic benefits with environmental sustainability. 

In advancing the circular economy, Indonesia Circular Economy Consortium (KESI), affiliated with the UGM Center for World Trade Studies (CWTS) aims to boost circular economy-based SMEs, communities, and institutions based on local wisdom and knowledge. Currently, KESI has more than 20 members in Yogyakarta, Bali, and other regions in Indonesia, such as Rumijo Eco Indonesia, Sekolah Sampah Renggas Trengginas, and Sekolah Anak Sanggar Alam (SALAM). In  December 2022, KESI was also actively involved in organizing the Circular Economy Expo, which was attended by more than 50 participants from industry, community, and education sectors.

After developing and strengthening the consortium network, KESI held its routine meeting on 28 January 2023, at the PSPD UGM Office in which KESI Secretariat is also located. This meeting was KESI's initial milestone in reflecting on its commitment to realizing a sustainable, circular economy for its members. In this meeting, KESI members discussed the opportunities and challenges of implementing a circular economy in various sectors, particularly in SMEs and community sectors.

As a follow-up to this discussion in the next few months, KESI will soon organize skills, management, and marketing training classes for its members, and then it will be opened for the public. This program is expected to be a key solution to the problems of MSMEs that have limited access to upgrade their skills, management, and marketing proficiency. Furthermore, this training program aims to accommodate the vast range of participants, including training that is accessible to everyone, not just to KESI members. Thus, KESI will continue to be committed to implement circular economy practice based on collaboration and empowerment for all levels of society.

It has been a long time since the Special Region of Yogyakarta has faced the waste management problem. A bulk of the budget has been allocated to carry out waste management in this region, yet implementing well-operated waste management is still a far-finish line to be accomplished. As the existing reality so far, the response towards the waste management problem is based on short-term solutions namely opening and expanding dump fields and prohibiting inorganic waste. Nevertheless, to what extent are those solutions able to endure when the waste relatively increases? 

Concerning the existing conditions, waste management in Yogyakarta should be handled through a cross-sector approach. Waste management should involve various stakeholders such as industry sector, community, and government. 

Boy Chandra, the initiator of Guwosari Training Center (GSTC), thought that integration in waste management in Yogyakarta should be deepened. Interestingly, increasing waste volume in Yogyakarta is not a ‘problem’, Boy argued. Waste management-based industries are able to maximize their production capacity in the middle of expanding the demand for recycled-originated products. Boy mentioned several ideas regarding the integration and diversification strategy in managing waste.

First, cross-sector cooperation in waste management is imperative to protect the environment and benefit all entities around the waste management ecosystem. It means that the “One Village, One Waste Management System” policy to create end-products is such a significant step in the sub-district. Hence, the village becomes a first-hand entity in controlling waste flow within the local community. That policy can be commenced by raising the local community’s awareness about the importance of waste governance and creating community-powered waste management in the next step to go.

Second, beside the need to deepen multi-sector coordination, community-powered waste management should agree on the use of diversification or specialization strategy, based on types of waste that are cycled by the advanced waste recycling industry. This approach is expected to encourage collaboration between waste recycling industries and avoid unhealthy competition. Furthermore, the diversification approach will easily map the potential outputs of the waste recycling industry in Yogyakarta.

Tourism Awareness Group (or so-called "Pokdarwis" in Bahasa) is a community-powered group that focuses on energizing the village's potential in the tourism sector. Pokdarwis of Sumber Sumilir is a Tourism Awareness Group based in Sumberharjo Village, Prambanan Sub-district, Sleman Regency. This village is well-known for its two tourist destinations一Teletubbies Hill and Domes-shaped house一beside the lovely scenery because of the expanse of rice fields and greenery. 

By setting a mission to reactivate tourism in this village that has been in a downturn caused by the pandemic for two years, Pokdarwis of Sumber Sumilir chooses a progressive approach accommodating friendly policy towards the environment. In doing so, Pokdarwis put the priority on community empowerment approach to rectify the existing environmental condition, hoping that it will attract tourists to come. That approach is assessed as a significant step in addressing unwell-managed waste.

Regarding that environmental issue, Pokdarwis of Sumber Sumilir precisely re-ignited tourism activities in Sumberharjo Village by upholding the environmental-motivated movement initiated by Andy Purnawan. Andy is a 'creativepreneur' specializing in a leather craft named "Kenandy." Kenandy steadily strengthens the circular economy vision by becoming a member of the Indonesia Consortium for Circular Economy (ICCE). Andy argued that the spirit of protecting nature has to be integrated with the community empowerment agenda. 

Lack of waste management and environmental education in this village, Andy aims to improve these conditions. Tourism and a good environment are two things that should bolster hand-in-hand, Andy thinks. Therefore, Andy envisions that the tourist attractions in the Sumberharjo Village will be based on ecotourism一 a concept that combining local wisdom of rural life with natural tourist attractions. In general, the concept of ecotourism will be packaged through “Clean Village” activities.

Simultaneously, to achieve a better situation of tourism in Sumberharjo Village, Pokdarwis, presided over by Andy, has initiated concrete actions involving 18 sub-village in Sumberharjo in regard to collecting the waste by its types. Collaborating with Rapel Indonesia, this action has successfully launched three waste banks in Sumberharjo for the past four months, namely Cincing Jarik, Puspa, and Brilian Teletubbies.

Cincing Jarik, one of the excellent precedents of the bank of waste in Sumberharjo, has been running its business for the last three months. This waste bank consists of 10-12 households as its members. Every single member household in this waste bank is responsible for classifying wastes by their types on the level of family basis before storing them in a collecting point each month.

Beyond existing banks of waste, Andy and his team, on December 21st, 2022, also massively held a seminar about classifying inorganic waste in Sengir Sub-village. Marta Yenny, the representative of Rapel Indonesia taking a role as speaker, underlined that the bank of waste and its system will directly support circular economy practices to realize a cleaner environment and healthier people, exceedingly Sumberharjo is identified as a tourism village. To conclude, Andy also reaffirmed that this so-far action will get enough attention from various stakeholders to empower the tourism sector in Sumberharjo in the context of a post-pandemic recovery agenda.

The surge of inflation and economic crisis potential in many countries significantly affect the financial sustainability of the garment and textile industry in Indonesia. The once blossoming industries in the 1990s have recently suffered global economic consequences of COVID-19. Alas, the unavoided situation propels the garment and textile industry to implement mass layoffs. 

Garment and textile industry are correlated, yet the focus of each industry differs. While the garment industry focuses on manufacturing items of clothing, the textile industry focuses on producing, processing, and manufacturing of fabrics. In 2021, Indonesian textile industry became a labor-intensive industry with up to 1,4 million workers.

The Increasing Number of Layoffs

The mass layoffs in the garment and textile industry have occurred in various regions in Indonesia. The Executive Director of Indonesian Footwear Association (Aprisindo) Firman Bakrie mentioned that the amount of orders for export has, in fact, been declining since July 2022. The late gathering of data after export makes the garment and textile industry still seem to be growing when the reality proves otherwise. This is also the reason for the delayed realization of the mass layoff that is currently happening.   

This phenomenon also occurs in Subang, West Java, in which the Head of Manpower Agency (Disnakertrans) of Subang Yenni Nuraeni revealed the existence of 10.000 fired workers from 25 garment factories in Subang. The spokesperson of the Textile Business Organization in Subang (PPTPJB) Sariat Arifia also stated that companies have reduced their workforce by up to 50%. Moreover, data from PPTPJB shows that the closure of 18 garment factories in West Java caused 90.000 job losses. Based on a survey by the Central Bureau of Statistics (BPS), there is a diminution of the textile industry workforce from 1,13 million to 1,08 million in August 2022. 

The Cause of Mass Layoffs

The mass layoffs in the garment and textile industry is prompted by one main issue: the decreasing export demand. According to the Deputy of Apindo Workforce Division Aloysius Santoso, the demand for textile and garment products from the United States and Europe have diminished significantly by as much as 50% until mid-2023. The surging prices of basic goods drives the society to increase their savings by reducing expenditures on garment and textile products. In consequence, there has been an excessive supply of garment and textile products because the products are not fully absorbed by the market.

Furthermore, the COVID-19 related regulation to restrain cargo ships mobility also impinge the process of garment and textile products export. The regulation delayed the arrival time of garment and textile products, which lowered new demands. 

The Role of the Indonesian Government

The escalating number of mass layoffs in the garment and textile industry has righteously caught the Indonesian government’s attention. Hence, the government should do in depth research and calculation before implementing the policies to prevent further layoffs. Febrio Kacaribu mentioned that the aggregate growth of the textile and garment industry is still considered well so the government has to thoroughly investigate the developing issues of mass layoffs.

Not merely affecting the garment and textile industry, this issue urges the government to implement cautious approach and policies. Vice Chairman of Indonesia Parliament (DPR) Abdul Muhaimin Iskandar reiterated the need for the government’s concern wherein the layoffs in the garment and textile industry may impact other industries as well, particularly during the economic crisis that is predicted to happen next year. He suggested concrete policies from the government to tackle the issue, such as policies to absorb garment or textiles products from SMEs. Furthermore, the Indonesian government should aim for the non-conventional export market for the domestic garment and textile industry.  

Indonesia will still host the U-20 World Cup in 2023. In the aftermath of the Kanjuruhan Stadium tragedy, Indonesia’s right to conduct the U-20 World Cup was questioned due to the possible sanctions from FIFA – the world's highest governing body of football. However, the sanctions were not discussed in the meeting between President Joko Widodo and the President of FIFA last month. Contrarily, FIFA’s President, Gianni Infantino, announced  the FIFA team’s plan to visit Indonesia as a way to enhance cooperation and collaboration in preparing the tournament. 

The U-20 World Cup is expected to bring plenty of advantages for Indonesia on its first hosting experience. These are the U-20 World Cup’s economic benefits for Indonesia.

What is the U-20 World Cup?

The World Cup is an international football competition organised by FIFA every four years. Each country gets a chance to become the host of the World Cup, which has been held regularly since 1930. FIFA also organises other international football tournaments for youth players (U-20 World Cup and U-17 World Cup), for women (U-20 Women's World Cup and U-17 Women's World Cup), for football clubs (Club World Cup), and for other types of football such as Futsal World Cup and Beach Soccer World Cup.

As one of the most popular youth tournaments, the U-20 World Cup is held biannually for national team players who are under 20 years old. So far, there have been 24 teams from 24 countries that will compete for the prestigious trophy. The 24 countries that qualify for the final stage will be drawn into six groups of four teams. Currently, Indonesia has joined five teams from Europe, four teams from North America, and two teams from Oceania.

Although the locations of city and stadium for next year's U-20 World Cup has not been determined, Indonesia has been preparing six stadiums, namely the Bung Karno Stadium in Jakarta, Si Jalak Harupat Stadium in Bandung, Manahan Stadium in Solo, Gelora Bung Tomo Stadium in Surabaya, I Wayan Dipta Gianyar Stadium in Bali, and Gelora Sriwijaya Stadium in Palembang. To support the preparations, the Indonesian government is currently renovating the stadiums’ infrastructure, especially upon the stadium grass.

The Economic Benefits of Hosting the World Cup

In general, the World Cup provides an opportunity for the host country to increase international perception. Broadcasted both by national and international media, the U-20 World Cup provides an opportunity for Indonesia to exhibit not only the grandeur and success of the tournament, but also the potential of tourism in various regions in Indonesia.

The advancement of Indonesia’s tourism sector through the U-20 World Cup is expected to bring  several multiplier effects, wherein the presence of foreign tourists as the spectator of this competition will boost the sector. This projection is based on Poland's economic growth after hosting the U-20 World Cup in May and June 2019. According to the Polish Statistics Agency, there was an increase in the number of domestic and foreign tourists as seen from the occupancy rate of hotels and similar inns. In May 2019, the number of residents was recorded at 3,280,645. This result increased by 8.9% compared to the previous year.

Besides tourism, Indonesia can take advantage from the entry of investment. The need to increase the accommodation, transportation, and infrastructure facilities for the competition can be utilised to attract and establish partnerships between domestic and foreign investors. Indonesia’s Minister of Tourism and Creative Economy Sandiaga Uno plans to massively promote Indonesian tourism through digital marketing. Apart from investing in the tourism sector, domestic and foreign investors can actively participate in various infrastructure renovation projects for the U-20 World Cup. 

The infrastructure renovations and the increasing accommodation facilities will create more jobs that will subsequently contribute to the GDP of the host country. Various international events require international infrastructure and facilities standard, with no exception the U-20 World Cup. Therefore, the tournament requires  a large number of workers to achieve the standard. Lee and Taylor (2004) reported more than 31,000 jobs created in Japan and South Korea during their collaboration in hosting the 2002 World Cup. This job creation helped create an economic impact of approximately $1.35 billion in output, with an additional $1 billion directed toward collective income and value.

Looking from the previous hosts’ pattern of experiences, Indonesia will likely receive similar economic benefits from hosting the U-20 World Cup in 2023. The national and local government are required to not only prepare the tournament, but also utilise the economic potential of the international competition for national economic development. 

Various global financial institutions such as the International Monetary Fund and the World Bank have issued early warnings about the possibility of a global economic recession in 2023. The economic crisis that occurs in several countries this year is an early indication for next year’s recession. Moreover, Ned Davis Research predicts that the chance of next year's global economic recession is up to 98.1%.  

Quoted from Investopedia, recession is a condition in which a country's economy is slowing down significantly for a long period of time. The decrease of Gross Domestic Bruto (GDP), increasing unemployment rate, and declining consumer trust are the indications of recession. What are the factors that cause global economic recession in 2023 and how likely will Indonesia’s economy be in 2023?

High Inflation 

According to Bank Indonesia, inflation is the continuous increase of goods and services prices during a period of time. Inflation is not always bad if it still occurs within reasonable limits of each country’s national economy. For example, the United States (US) targets 2% of inflation yearly, Indonesia targets 4%, while Turkey targets 5% in one year. Yet, the current surge of inflation above the targets set in various countries impacts negatively on the economy. 

Boediono categorizes inflation into four types. First, mild inflation which is characterized by a low rate of inflation that occurs for a long period of time. This inflation is below 10% per year. Second, moderate inflation that may reduce people's welfare with a fixed income. This inflation category is up to 10-30%. Third, heavy inflation which is marked by the public's unwillingness to save in banks because the yields given are below the inflation rate. This inflation ranged from 30-100%. Lastly, hyper-inflation that is indicated by a general goods price increase up to more than 100% in a year period.

The most recent high inflation is ascribed to the huge disparity between supply and demand of commodities, which is further exacerbated by the Russia-Ukraine war. The disruption caused by the Russia-Ukraine war utterly impacts the supply of oil, gas, and food supply globally. Subsequently, the war prompts the surge of diminishing energy and commodities prices that lead to higher inflation. OECD’s interim chief economist Alvaro Pereira notes that the significant increase of raw material and energy is a consequence the world should pay for the ongoing Russia-Ukraine war. 

Based on the year-on-year data in August 2022, the inflation in Turkey and Argentina is 80,21% and 78,5% respectively. Developed nations such as the US and Germany also experience inflation up to 8,3% and 7,9% as of August 2022. Inflation in the US is at its highest in 40 years. As per August 2022, the inflation rate in Indonesia is at 4,69% and reached 5,95% in September which was caused by the rising price of food and energy.  

The differing influence each country has over international trade and economy matters in assessing the severity of global inflation. On one hand, countries with great economic power like the United States will have a worse impact on other countries and the entire global economy if inflation occurs. On the other hand, countries with little to no significant power will generate minimum impact. 

Additionally, the Executive Director of Institute for Development of Economics (INDEF) Ahmad Tauhid mentioned that the high level of inflation in various countries will increase the number of people living in poverty. Consequently, middle and poor households suffer more from their reduced purchasing power and savings as the prices of basic goods continue to soar.

The Rise of Interest Rate

In short, interest rate refers to the amount of interest set by the central bank as the reference for other financial institutions and products. To slow down the inflation, the central bank needs to increase the interest rate which will decrease the willingness of society to spend and borrow money. Increasing the interest rate will curtail the consumption demand level and eventually reduce the inflation rate. 

The aggressive policies to increase the interest rate have been implemented in many countries to reduce inflation. The US Central Bank, The Federal Reserve (The FED), has maintained its interest rate policy in recent months to push down inflation. The FED is predicted to increase the interest rate up to 3-4%, the highest in 15 years. Likewise, the central banks in England and the European Union also increase their interest rate. England sets the interest rate up to 2,25% as of September 2022, the highest in 14 years. The European Union central bank also sets the highest interest rate in 11 years, up to 1,25% as of September 2022. 

Despite aiming to impede the inflation, the surge of interest rate does not automatically dismiss the possibility of recession. The decreasing demand level due to high interest rates will decelerate the economic activity. According to the World Bank, the aggresive increasement of interest rate policy in many countries will also lead the world into a global economic recession in 2023. The increase of interest rate to reduce the inflation will slow down world Gross Domestic Product growth up to 0,5% in 2023 and induce global recession. 

Recession Potential in Indonesia

Minister of Finance of Indonesia Sri Mulyani mentioned that Indonesia will unlikely to experience an economic recession in 2023. Furthermore, Mulyani mentioned that some factors will obviate Indonesia from recession. The surplus of Indonesia’s international trade balance in August 2022 and the increase of manufacturing activity have been the positive catalyst for Indonesia’s economy in the midst of global economic uncertainty. Amidst the economic slowdown in several countries, the IMF and World Bank predict that Indonesia’s economy will still be able to grow up to 5,1% – 5,3% in 2022. Similarly, the Head of Fiscal Policy Agency (BKF) Indonesia Febrio Kacaribu mentioned that Indonesia’s economy will still grow up to 5,6% – 6% in the third quarter of 2022. 

However, Sri Mulyani urges Indonesian policymakers to stay vigilant in formulating and executing financial and monetary policies. The surge of interest rates to fight inflation prompts economic slowdown globally. Hence, despite the positive prediction of Indonesia’s economic stability, Indonesia policymakers should formulate and implement policies to anticipate and prevent domestic recession. 

The annual World Trade Organization Chairs Programme (WCP) Conference was successfully held on 25-27 July 2022, in Geneva, Switzerland. The representatives from World Trade Organization (WTO), WCP board, and WCP chairholders gathered to discuss various issues related to international trade and the vision for WCP years ahead. Topics such as the results of the 12th WTO Ministerial Conference (MC12), WTO responses towards the impact of COVID-19 pandemic, and the advancement of sustainable trade became the main focus of the three-days conference. 

Established in 2010, WCP is a programme that aims to enhance research activities and knowledge dissemination related to international trade in developing countries. Initially, there were only 14 academic institutions that were chosen as chairholders, in which Center for World Trade Studies (CWTS) UGM  has been one of the chairholder since the beginning. Currently, there are 36 universities from various developing countries that have joined the WCP scheme. 

The Director of CWTS UGM, Dr. Riza Noer Arfani, represented Indonesia in the 2022 WCP Conference. In this conference, Dr. Riza presented several case studies related to circular economy activities, MSMEs development, and Indonesia economic recovery which have been actively implemented by CWTS UGM since 2021. The activities of CWTS UGM related to the previously mentioned issues include both local and international workshops, webinar, journal publication, and podcast releases. Together with other delegates, such as the delegates of Mauritius, Barbados, and Kenya, Dr. Riza reiterates how WCP projects, which are relevant for both developed and developing countries, can play a significant role in promoting sustainable and inclusive international trade. 

During the annual conference, WTO Director-General Dr. Ngozi Okonjo-Iweala conveyed the importance of the chairholders role in propelling the implementation of MC12 by delivering research-based policy recommendations. In the closing statement delivered by WTO Deputy Director-General Xiangchen Zhang, the active participation from chairholders is hoped to maintain and improve the research and dissemination activities on international trade related issues, as well as collaborations with policymakers and stakeholders.  

The Ministry of Trade of the Republic of Indonesia (Kemendag) has officially resumed negotiations on the Comprehensive Economic Partnership Agreement (CEPA) between Indonesia and Peru after a delay since 2017. Reporting from IDN Financials, Minister of Trade Muhammad Lutfi and Deputy Minister of Foreign Trade of Peru Ana Cecilia Gervasi Díaz held a special meeting to immediately start communicating and synergizing together so that trade negotiations between Indonesia and Peru can be carried out immediately. The meeting was held on the sidelines of the APEC 28th Minister Responsible For Trade (MRT) series of meetings held from 21 to 22 May 2022 in Bangkok, Thailand.

Minister of Trade Muhammad Lutfi revealed that the Indonesia-Peru CEPA negotiations had been delayed for 5 years due to the approach used for negotiations in 2017, when the Peruvian Minister of Foreign Trade and Tourism invited Indonesia to start the cooperation at the end of 2017 after the United States resigned from the Trans-Pacific Partnership (TPP). The steps taken by the Peruvian government are considered quite aggressive in the context of developing a cooperation plan in free trade with Indonesia.

The United States' withdrawal from the TPP on Monday (23/1/2017) strained their relations with their Asian allies with close ties to China. At that time, Peru had established free trade agreements with 15 countries with China as one of the countries that began to establish diplomatic relations. Negotiations for trade cooperation between Indonesia and Peru were delayed after the incident, but then managed to re-establish five years later in the middle of 2022.

The leaders of the two countries observed enormous potential that could provide positive benefits in the trade sector of both parties with the superior commodities owned by each country. The main commodities that Indonesia offers to Peru include motor vehicles, biodiesel, unused postage stamps, footwear, and yarn fibers. Meanwhile, Peru will be actively exporting cocoa beans, fertilizers, wine, coal, and raw zinc to Indonesia. In order to accelerate the establishment of a mutually beneficial cooperation agreement, they increased their pace to finalize the framework of their agreement.

In the first quarter of 2022, the total profit obtained by Indonesia and Peru in their trade sector was US$ 99 million, an increase of 18.84% compared to the first quarter of last year which was still around US$ 83.30 million. Meanwhile, throughout 2021, the total profit from the Indonesia-Peru sector was recorded at US$ 402.70 million, an increase of 61.8% compared to 2020 which was recorded at US$ 248.82 million. International trade activities with Peru managed to generate a surplus of US$ 234.21 million for Indonesia in 2021, an increase of 142% compared to 2020.

On Friday last week, (13/5) at 06:36, gold prices experienced a significant decline worldwide. This decline occurred after the price of gold had reached its peak on Tuesday (8/3) at US$ 2052.4 per troy ounce. Currently, the price of gold is pegged at US$ 1,818.93 per troy ounce, down 0.15% from the previous day's price of US$ 1,850.6 per troy ounce.

This price change was the result of a 3.4% price correction that occurred a week earlier on Friday (6/5), where the gold price was at US$ 1882.9. Moreover, the evidence of gold prices decreasing appeared more prominent when compared to the price on Friday (13/5) with the price a month earlier on Tuesday (12/4), which was US$ 19666.5. On Wednesday (13/4), the price of gold was still around US$ 1977.7, 7.8% higher than the price on Friday (13/5). Until this day, the gold price in May still remains on a flat line in the same range and has not shown any signs of recovering.

Good Returns considers the main reason behind the constant decline in gold prices is somehow related to the United States Dollar’s value increase. This occurs as the effect of the Federal Reserve's benchmark rise of interest rate. The main factor that caused the United States Dollar to skyrocket is the market expectation of a 50 basis points interest rate hike in June. High market expectations for an increase in interest rates are caused by the high inflation rate in April 2022 which reached 8.3%, which is far from the normal rate of 2%.

Quoted from Reuters, Bart Melek stated that the Federal Reserve shows concern on the possibility of more aggressive increase of interest rates on the United States Dollar which could continue to lower gold prices. The same issue was also expressed by Edward Moya from Oanda, where he explicitly stated that the strengthening of the United States Dollar made gold in the danger zone. It is feared that the price of gold will continue to decline to reach the range of US$ 1,750 if the price cannot penetrate the US$ 1,800 mark in the future.

Even though the price of gold has not yet shown progress, the price of gold still has the potential to rise if global economic conditions weaken. Reporting from CNBC, Ravindra Rao from Kotak Securities stated that gold will remain the safest asset of choice for people when economic conditions deteriorate. He also stated that the price of gold is unlikely to rise sharply unless the United States Dollar weakens drastically, like what happened in January 2022.

Reporting from Kompas.com, at the end of January 2022 the price of gold had increased due to geopolitical conditions, when the conflict between Russia and Ukraine had just begun. At that moment, these geopolitical conditions caused the Federal Reserve not to raise its benchmark interest rate which caused the value of the United States Dollar to decline. This can increase public interest in investing in gold and lift positive sentiment towards precious metals, especially gold.