Published: 2019.11.29. Gold market uptrend still valid

Gold market uptrend still valid - Preview

Over the past few days, the price of gold has experienced some correction. After reaching the mark of $ 1,534 per ounce on August 26, the yellow precious metal is now trading at $ 1,455 per ounce (-5.1% decrease).

According to some analysts, the recent correction in the price of gold may be due to the fact that the summer rise in gold prices was too fast. The fact is that since October 2018, the cost of yellow precious metals in US dollars has grown by almost + 30%, which for this asset is a significant increase.

Moreover, financial markets lowered their expectations about a further cut in interest rates by the US Federal Reserve. As representatives of the Federal Reserve themselves have confirmed, this year there will be no further decline. A pause was taken in this process, at least until the next meeting, scheduled for January 30-31, 2020. For this reason, investments in ETF funds may slow down and the gold market will be under pressure.

According to experts, a long pause with interest rates is due to the fact that the likelihood of a recession in the global economy has weakened. However, the upward trend in the gold market is still maintained. This also applies to silver.

The demand for gold and silver from investors will remain at a high level, as the monetary policy of the Central Banks will continue to depreciate paper currencies by reducing rates and printing new money. At the same time, increased volatility in the precious metals market cannot be ruled out. Therefore, the fluctuation of gold prices is possible both in the direction of growth and decrease.

Analysts believe that the decline in prices will be short-term. Long-term investors usually use such reductions to build up their positions in precious metals, since for a long period of time, gold and silver help maintain savings from depreciation.