Gold Price Drops To Bottom

Gold Price Drops To Bottom

Gold prices may already have hit bottom for the year after declining for the past six months in a row—the longest streak of losses in nearly three decades.

Lower prices have contributed to a boost in global central bank purchases of gold.

Jeff Wright, Executive Vice President of mineral exploration company GoldMining (ticker: GOLD.Canada), noted that central bank gold reserve purchases were the strongest in three years. He said, “I do believe gold has either reached a floor or is pretty close to one.”

Central banks didn’t buy more gold just because of the price decline. “Questions on United States–China trade ramifications [and] Brexit” helped boost demand for haven gold, Wright went on to say.

Global central banks added a net total of 193.3 metric tons of gold to their reserves in the first six months of this year, up 8% from 178.6 metric tons in the same period a year earlier, according to the World Gold Council, or WGC. That marked the strongest central bank gold purchases in the first half of a year since 2015.

Poland, in particular, grew its gold reserves by 1.9 metric tons in July and by 7.5 metric tons in August, WGC says.

Those are not large amounts, but normally, European central banks sell gold, not buy it.

To be sure, gold prices have reasons to remain weak. Rob Haworth, senior investment strategist at U.S. Bank, has a “cautious view” on gold and expects to see lower prices over the rest of this year.

He believes that the dollar is likely to strengthen as the Federal Reserve continues to tighten policy and U.S. economic growth remains solid.

In addition to those potential price pressures, gold has historically suffered its worst monthly performance of the year in October. Dow Jones Market Data shows a decline of 1.27% in gold prices, on average, for that month, based on data going back to 1990.

 

 

 

 

 

 

Related posts

Leave a Reply

Your email address will not be published. Required fields are marked *