Ever since the middle of March, when it was so close to reaching its previous record high, the price of gold has been under intense pressure. Since that time, the gold price has dropped by more than as expected per ounce, and it has found some support more than per ounce. The number of net long positions held on the COMEX has been falling over the past few weeks, and large amounts of money have been taken out of global gold ETFs.
The performance of gold throughout the years -
Gold's performance has been better than
predicted by models with only a few variables. The gold price
today should be about 21 percent lower than it is right now,
according to one widely used model that is based only on the movement of the
dollar and real rates.
Gold Vs. Dollar - Which One To Save?
First, a negative association between gold and
the dollar does not always exist. Over the last few months, we've seen this
link change from negative to positive, just as it has in the past.
Second, an increase in the gold
price per gram UK can reduce the allure of gold if it leads to an
increase in the economic cost or if it reflects higher economic growth in the
future. It does not appear that one of those is correct at this time. The
anticipated growth rate is decreasing, and the opportunity cost, when
accurately measured in real terms, is still at a historically low level.
What do investors say about buying gold?
Before the year 2022, investors had purchased
gold in unprecedented quantities. The year 2020 witnessed a rise in investment
in gold.
Gold bears a liquidity premium, and in an
atmosphere in which investors are encouraged to "sell everything,"
many investors sell whatever they can in order to satisfy repayments or margin
calls. This phenomenon was observed in 2008 when the gold price per gram UK dropped
in March of that year but then rebounded in October, beginning a new uptrend
and achieving a good return for the year overall.
To Sum It Up
Investors migrating down the liquidity curves
to long-term assets that are considered "hard to liquidate" are
discovering that keeping some gold on board is even more critical as their
demand for income and need for yield grows.
