The recent shock in the gold market, marked by a substantial price crash, can be traced back to a series of interrelated factors: US Federal Reserve (Fed) policy, the strength of the US dollar, and escalating geopolitical tensions. First and foremost, the decision of the US Fed to target higher interest rates diminished the appeal of gold as an investment. As yields on government bonds rose, investors turned their attention away from gold. Second, the concurrent strengthening of the dollar only intensified gold’s fall. As a dollar-denominated commodity, gold becomes less appealing to international investors when the dollar’s value increases. Last but not the least, geopolitics played a role too. Rising tensions and uncertainties provide a boost to gold’s status as a ‘safe haven’ asset. However, recent diplomatic efforts to defuse tensions and issues have inadvertently led to the downturn of gold prices. All in all, one can see how interconnected market forces and global developments feed into gold’s ongoing volatility. Read More
Leave a Reply