Falling Gold Price: The precious metal drops below $ 1,700
The falling gold price is destabilizing analysts and investors who base financial strategies on the precious metal, historically considered a safe haven asset in economically difficult times.
Gold has always represented the safe haven asset par excellence, considered among the (almost) safe investments where you can operate at low risk.
Moreover, precisely in times of crisis, gold has traditionally performed upwards, allowing investors to run for cover and obtain possible profit margins.
The strong inflationary pressure, the economic crisis and the international geopolitical instability represent an alarming situation today and the gold rush would have been the best way to safeguard savings.
However, today the gold price does not seem to respect the traditional trend and the falling gold price represents a trend never recorded before.
Falling Gold Price Analysis
With the fall in the price of gold, the certainties of investors who are particularly accustomed to sheltering their savings on the precious metal also seem to collapse.
In fact, the following graph shows how gold recorded a significant decline compared to last March 2022, when it should have performed upwards during this difficult economic phase.
The causes of the falling gold price
What are the causes of the falling gold price ? This is the main question that market analysts ask themselves about the counter-current trend of gold compared to the traditional performance of the safe-haven asset.
An initial response would derive from the increase in interest rates imposed by the Federal Reserve , in the forefront to combat galloping inflation.
The increase in interest rates makes the dollar stronger, which has reached parity with the euro and the greenback is like gold another interesting safe haven asset.
As the precious metal is pegged to the dollar, investors seem more inclined to bet on the US currency , effectively abandoning the investment in gold.
Gold Price Predictions
Taking into account that the dollar appears to be more attractive than the precious metal due to the increase in interest rates that make the currency stronger, what could be the predictions for gold ?
Analyzing the negative trend of gold since last March, it is possible to note that from $ 1,822 an ounce it recorded a decrease of 5.17% in the space of 1 month and of 8.91% in the following 3 months .
Since the beginning of the year, gold has lost 7.82% of its value and its decrease does not seem to want to stop at all due to the increase in interest rates.
It is estimated that the Federal Reserve will be forced to revise interest rates upwards until 2023, so the forecast for the price of gold may still be bearish in the medium term.
What to do after the collapse of the gold price?
Today the gold price shows a drop since the beginning of the year equal to -7.82% and a devaluation at 12 months which stands at -4.59%.
Data that does not make the precious metal economically advantageous for investors who would risk suffering further declines.
It does not mean that the price of gold will not rise again, but as long as the Fed raises interest rates, the safe haven asset may continue its decline.
According to analysts' forecasts, the increase in interest rates could last until the first months of 2023, when inflation is expected to decline and monetary tightening should ease.
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