Preamble:
Recently, there has been a wave of relatively large corrections in gold prices, which has caught many investors off guard. Until then, gold had been a favored safe-haven asset, with prices soaring to the point of breaking through the important $2,000 per ounce mark. However, just when the market was generally optimistic about gold, its price fluctuated greatly, once falling below $1,900, which surprised many investors.
1. Why did the price of gold plummet?
1. The price has risen too much and has lost its carrying capacity
2. The global situation is relatively stable
3. Central banks around the world continue to increase their holdings of gold
1. Why did the price of gold plummet?
Gold has always been a favored safe-haven asset, and its price fluctuations are affected by various factors such as the macroeconomic situation, geopolitical situation, and the US dollar index. And this time, what is the main reason for the sharp correction in gold prices?
1. The price has risen too much and has lost its carrying capacity
Prior to this, affected by the epidemic, global economic growth slowed down, and even a recession, which led many investors to worry about the future economic situation and chose to transfer funds to safe-haven assets, and gold, as the first choice among safe-haven assets, was naturally sought after by funds, and the price soared, and even once broke through the important threshold of $2,000 per ounce.
However, with the gradual improvement of the global epidemic situation, many countries have successively introduced stimulus measures, and the economy has gradually recovered, which makes the market full of confidence in the future economic situation, and the demand for safe-haven assets has also decreased to a certain extent, which has led to a large correction in gold prices.
2. The global situation is relatively stable
In addition, the relative stability of the global situation is also an important reason for the collapse of gold prices. Prior to this, due to the escalation of the conflict between the United States and Iran, there was even a possibility of stopping, which made the market full of worries about the geopolitical situation, and the uncertainty of the geopolitical situation often becomes a strong driving force for the rise in gold prices.
However, as time goes on, the possibility of a temporary failure to fight in the Middle East is relatively high, which has eased the market's concerns about the geopolitical situation, which naturally reduces the demand for safe-haven assets, which is one of the important reasons for the collapse of gold prices.
3. Central banks around the world continue to increase their holdings of gold
Of course, in addition to the factors mentioned above, the continued increase in gold holdings by global central banks is also an important reason for the collapse in its price. Prior to this, the central banks of many countries have released the latest gold reserve data, including China and Russia, and the gold reserve data of these countries have increased significantly, which is also an important factor for the market to affect the price of gold recently.
At present, the central banks of many countries around the world continue to increase their holdings of gold, which also reflects the gradual weakening of confidence in the US dollar and US bonds, which makes the market full of worries about the future macroeconomic situation, and will naturally choose to transfer funds to safe-haven assets.
2. How to invest in gold in the future?
On the contrary, with the gradual recovery of the global macroeconomic situation and the gradual weakening of confidence in the US dollar and US bonds, the status of gold as a safe-haven asset may be further strengthened, and the potential for its price to rise still exists, which is also where investors need to pay attention.
1. Cover the dip and seize the opportunity
Of course, for the current gold price, investors also need to have a choice when operating, you can consider taking the strategy of covering the dip, reduce the risk in the way of average cost, and also grasp the investment opportunities brought by price fluctuations, after all, in the short term, the volatility of gold prices is still large, which has certain requirements for investors' financial strength and psychological quality.
2. Buy in batches to reduce risk
In addition, for the future price of gold, investors can also consider adopting a strategy of buying in batches, which can not only reduce the risk caused by impulse, but also better grasp the rhythm of the market and some information contained in price fluctuations, so as to make more informed investment decisions.
Epilogue:
On the whole, the current gold price does have a certain pullback, which may bring some pressure to short-term investors, but in the long run, gold's status as a safe-haven asset is still unshakable, and its upward momentum still exists, and the global central bank continues to increase their holdings of gold, as well as the gradual weakening of confidence in the US dollar and US bonds, will also become a strong support for its price rise, therefore, whether from the perspective of long-term investment or short-term investment, the bargain layout of gold is still attractive.