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But by Wednesday, gold prices were back in the red, losing gains made earlier in the session.
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Here's a look at everything that glitters (or doesn't) with gold:
Why have gold prices risen over the years?
Simply put, the price of gold has risen due to a combination of high inflation (gold retains its value when the purchasing power of currencies declines), increased geopolitical uncertainty (Russian invasion of Ukraine, ongoing conflicts in the Middle East, increased trade tensions between the US and China), higher demand from central banks (diversification from the US dollar into gold helps countries protect their reserves) and investors seeking a safe haven.
Why the sudden drop in gold?
Yahoo! Finance said: “The sharp sell-off in the previous session was largely due to easing tensions between the US and China, but traders remain on edge ahead of late US inflation data and upcoming trade talks involving the US, China and India.”
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The last two times gold fell
According to InvestopediaThe price of gold fell by 29% from $1,695 in January 2013 to $1,200 in December 2014.
Following the 2019 pandemic, gold prices fell to a trading range of $1,700 to $1,900 before reaching a new high of $2,135 in late 2023. It subsequently fell to a trading range of just above $2,000.
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Is there any good news about gold?
Despite the drop, gold is still up 56% year to date, hitting an all-time high of $4,381 just a few days ago. The rally was fueled by heavy buying by central banks, geopolitical tensions and rising expectations that the Federal Reserve could soon cut interest rates.
What is the short-term future of gold?
Russell Shore, senior market analyst at Tradu.com, told Yahoo! Financials: “Gold is likely to remain volatile in the near term after its sharpest one-day fall in a decade. Spot prices fell below $4,070 an ounce as traders booked profits after months of record gains driven by bets on Fed rate cuts, dollar weakness and central bank buying.”
Will the gold price settle in the near future?
After Tuesday's decline, Yahoo! The financial sector reported that Citigroup lowered its forecast for gold, moving from an “overweight” recommendation to a more cautious stance. The bank's commodities research team warned of excessive concentration of long positions and suggested gold prices could enter a period of consolidation around $4,000 an ounce in the coming weeks.
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