Gold rush seems to be over

Published on: 13-Aug-2020
Category: Trading
Last updated: 13-Aug-2020

Gold rush seems to be over

The gold price has broken several records in the past few days and weeks and was considered a safe haven during the crisis. On Tuesday, the value of the precious metal plummeted by six percent, making it the biggest loss of a day since 2013. It was similar with the silver price. It experienced the hardest daily loss in twelve years and lost a full 15 percent. On Wednesday, the daily low in the gold price was $ 1,862 a troy ounce, which is a loss of over ten percent since the all-time high a few days ago. The gold price has since recovered and is trading at $ 1929 an ounce.

One reason for this can be found in another so-called safe haven. The value of the dollar has risen and thus the demand for raw materials, which are paid for in dollars, is falling. The gain of the dollar equals the loss of the precious metals. Another reason lies in US monetary policy. The rising real interest rate in the USA goes hand in hand with higher yields on bonds, which, in addition to natural performance, also yield interest or dividends. Gold, on the other hand, only lives from the performance and does not generate any further income.

Due to the unnatural rise in the price of gold due to the Corona crisis, the loss in value is only a correction or adjustment of the price. The real value was not reflected in the development of the gold price. Before you as an investor now use your chance to get started in gold investment, you should wait for the price to stabilize, according to an analyst at broker IG.


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