A report by the World Gold Council has revealed that if political and trade risks across the world come down, then gold prices may fall in the mid-term. The report also said that if the US dollar and treasury yields increase, the price of gold could go down even more. Gold prices may also be affected by low demand from regular investors and changes in gold buying by central banks.
The price was at a low level in November 2022
Last Friday, the price of gold was around Rs 97,511 per 10 grams. The recent increase in gold prices has attracted people’s attention. On November 3, 2022, the price of gold was at its lowest level of US$1,429 per ounce. Then it has more than doubled to US$3,287 per ounce. That is, it has increased by a CAGR of 30 percent annually.
This is why the price of gold has increased
Gold prices have increased due to the continuous buying by central banks around the world as well as rising geopolitical and recent trade risks. All this together has reduced the negative impact of the increase in interest rates of central banks and the reduction in inflation between November 2022 and August 2024. The report also said that due to the recent record-breaking rise in the price of gold, investors became a little cautious. People are now afraid of incurring losses.
This was also revealed in the study
The Council found out the periods when gold prices fell. This study revealed that if the geopolitical and trade environment around the world calms down, the demand for gold may decrease. Apart from this, if the US dollar strengthens or the treasury yield rises, the pressure on gold also increases. Also, if central banks relax in buying gold and common people also reduce investment in gold, then prices may come down.