The latest report of the World Gold Council (World Gold Council) has revealed a big revelation. If geopolitical and business tension is low worldwide, then the price of gold can be soft in the medium period. Not only this, if the US dollar and the treasury yield bounce, then the glow of gold can be faded. The council says that due to decrease in gold purchases of central banks and decrease in demand of common investors, gold rates can also be seen.
Gold prices boom
Gold has been in the market for some time. On 3 November 2022, when gold was at its lowest level, it was priced at US $ 1,429 an ounce. But now it has reached more than doubled to US $ 3,287 an ounce. That is, every year increase at a speed of 30%! There are frequent purchases of central banks, increasing geopolitical stress and recently trading risk of central banks behind this boom.
Together, they all surpassed the increase in interest rates of central banks and the negative impact of reduction in inflation between November 2022 to August 2024. Last Friday, the gold rate in the Indian market was around Rs 97,511 per 10 grams.
Why can gold prices fall?
The report of the World Gold Council states that the recent record breaking boom in gold prices has scared investors a bit. People are now thinking that there is no loss. The council investigated the old trends and told that due to some special reasons, the price of gold may decrease in moderate or long periods.
If the geopolitical and business environment is calm around the world, then the demand for gold may decrease. Also, if the US dollar is stronger or the treasury yield increases, the pressure on gold will increase. Also, if the central bank relaxes in buying gold and common people also reduce investment in gold, then prices can come down.
What will happen in a long time?
The council says that the possibility of a big decline for a long time is less, but if there is a big and constant change in demand, then there may be a significant reduction in the price of gold. For example, if big institutions and common investors reduce the money in gold, or if the supply of gold suddenly increases, then the price will be difficult to last.
What is advice for investors?
The glow of gold has wooed investors a lot in the recent past, but this report of the World Gold Council says that there is a need to be careful. Investors should keep a close watch on the world’s economic condition, geopolitical environment and the policies of central banks. If global risks are low or the US economy accelerates, the price of gold may fluctuate.
Disclaimer: This article is only for information and should not be considered as an investment advice in any way. TV9 India has to take advice from its financial advisors before taking any decision related to money to its readers and audience.