If you own any gold jewellery, you might’ve noticed its increase in value over the last year. The same could be said for people buying gold, who might be finding it a bit too pricey. Gold has seen a major rise during the COVID-19 pandemic due to its reputation as a safe investment and inflation hedge during times of economic uncertainty. Combine that with the fact that central banks lowered interest rates and printed loads of money, and you can see why it grazed the 2,000-dollar mark.
Unfortunately, gold’s value has declined since, and Monday brought a flash crash to its price. Gold opened the day down 4 percent with the price dropping 60 dollars in a matter of minutes, which left it at its lowest since March. The crash occurred due to the price falling below a key technical support level, which triggered stop losses for many futures traders. This, mixed with the fact that gold had poor liquidity at the time, caused the rapid drop. However, it also highlights the struggles gold has faced with the world going through a massive economic recovery. With the threat of inflation disappearing, and the likelihood of the Fed tapering stimulus, traders and investors have been less enthusiastic about the value going forward. Nonetheless, bargain hunters went to work, buying contracts at the dip and recouping the losses on the day. Do you think gold will continue to fall? Also, do you believe the Delta variant could be a positive catalyst for its value?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.