After nine successive weeks of price hike, gold is set to experience its first week of decline in value. As per Bloomberg, gold slipped to around $4,112 per ounce on Friday, October 24, which means it is likely to end the week with a slide of around 3 per cent in value.
This would be the biggest decline in gold prices since May, as per Bloomberg. Among the factors influencing the price of gold are the prospects for a breakthrough in the trade face-off between the United States and China. Volatility caused by this trade war had increased demand for gold as a safe asset.
However, with a meeting between US President Donald Trump and Chinese Premier Xi Jinping on the horizon and a trade deal expected, demand has eased and prices have gone down.
Gold’s rally
The rise in gold prices began in August. At one point this month, prices had reached the all-time high level of $4,381.52 an ounce, but saw a sharp drop on October 21. Data suggests that the sharp fall was caused by a large outflow from gold-backed exchange-traded funds.
“The correction looks to be stabilizing, but broader retail participation means volatility will likely remain elevated,” Saxo Capital Markets Pte strategist Charu Chanana told Bloomberg. “The next key resistance sits near $4,148, but a clear break above $4,236 may be necessary to confirm that upside momentum is back.”
{{/usCountry}}“The correction looks to be stabilizing, but broader retail participation means volatility will likely remain elevated,” Saxo Capital Markets Pte strategist Charu Chanana told Bloomberg. “The next key resistance sits near $4,148, but a clear break above $4,236 may be necessary to confirm that upside momentum is back.”
{{/usCountry}}Causes for steep fall in gold prices
Apart from the anticipated resolution of the trade war between China and the US, there are also expectations of a rate cut from the Federal Reserve. This, as per Reuters, has been factored in by investors. A 25 basis-point reduction in interest rate is very much on the cards, especially if the Consumer Price Index (CPI) is shown to have been at 3.1 per cent in September.
As of now, it seems prices of gold will moderate in the immediate future. However, any volatility in the CPI could change the situation.
Also Read: Gold price suffers biggest single-day fall in a decade, experts share mixed forecasts
FAQs:
What is gold’s price today?
The price of gold came down to around $4,112 an ounce today.
What is causing gold prices to fall?
Overheating in the previous weeks, as people saw gold as a safe commodity, is now leading to a correction. The expected breakthrough in the trade war between US and China is another factor.
What is CPI?
The Consumer Price Index shows the level of inflation in the market. It tracks changes in prices of key commodities.