On 9/08/2021 gold fell to 1684.37, recording a fall of 4.4% (the lowest price since 31/03/2021). The reasons that led investors to sell gold en masse have to do with their expectations regarding the future economic environment. More specifically:
1. Increased number of jobs in the US warn investors that the dollar is about to rise (the highest number of hires in the last 12 months).
2. They expect an increase in interest rates and the start of monetary policy titled tapering (purchases in government bonds are gradually being curtailed).
Data Source: Trust Economics https://trusteconomics.eu
Many no longer consider, in this case of tapering, the possession of gold as an attractive investment that offers protection against inflation.
July inflation data were high indicating that inflation will occupy investors at least until the end of the year. So, if there is a further acceleration of the inflation rate, the chances of a rapid increase in interest rates by the Fed are greatly increased.
Low gold prices seem like a buying opportunity.
At the same time, investors have abandoned other safe havens as the US Federal Reserve’s 10-year bond price has fallen as their yields have risen.
The fall in the price of gold was followed by the prices of other precious metals such as silver and platinum.
