Gold is frequently regarded as a secure and appealing investment for several reasons. Its historical role as a store of value spanning millennia has solidified its reputation as a dependable asset, especially during periods of economic uncertainty. Additionally, it frequently demonstrates strong performance in times of rising inflation. As paper currencies lose value due to inflation, gold’s purchasing power tends to maintain relative stability. The world’s favoured ‘safe-haven’ asset is currently not enjoying the status it usually holds.
Gold prices have witnessed a significant decline for six consecutive days and on Tuesday as well it is trading in negative terrain, approaching an important support level of 1,805-1,810. This ongoing downward trend is a result of the precious metal’s persistent testing of lower levels, primarily in response to the US Federal Reserve’s recent hawkish signals.
Technically, the gold had formed a ‘Doble Top’ pattern with an identical top placed around the level of USD 1,953 and USD 1,948. The neckline of the double top pattern was placed at USD 1,901.97 level and on September 27, we saw a decisive breach of the neckline of the double top pattern and thereafter, it has been carnage.
Spot gold has dropped to USD 1,823.75 per ounce, marking its lowest level since mid-March. Gold prices in India have witnessed a substantial drop, reaching approximately Rs 59,000 per 10 grams of gold. This comes after a remarkable surge in prices over the past five years when they more than doubled, soaring from Rs 30,000 in 2018 to surpassing Rs 60,000.
Indeed, gold offers valuable diversification benefits within an investment portfolio. Moreover, it boasts high liquidity, allowing investors to conveniently purchase or sell it in various forms, including bullion, coins, or through exchange-traded funds (ETFs). However, it’s essential to acknowledge that gold’s price can exhibit volatility, and it does not generate income in the form of dividends or interest, as is the case with stocks or bonds.
Additionally, the value of gold can be subject to influence from various factors, including shifts in interest rates, currency exchange rate fluctuations, and supply and demand dynamics.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.