The world has a love affair with gold. It’s been prized among currencies for thousands of years, and people have bet their fortunes on it. But the value of gold appears to be declining as more investors choose other assets like stocks or property instead. In this blog post, we will discuss the reasons for gold price dips.
1. Rising interest rates
Investors are starting to believe that the economy is beginning to recover, leading them to seek higher returns on their investments. This means less money is being put into assets like gold that have low or negative yields, as they are unwilling to accept these losses for increased security against inflation.
2. Inflation
Many people purchase gold as a hedge against inflation, but this fear is being lessened with the global economy continuing to improve. Investors have been turning their attention from worrying about keeping up with rising prices and are looking towards investments that can make them money instead of just holding onto it for protection.
With questions over gold’s future value, it’s no wonder that investors are looking elsewhere for returns.
3. Uncertainty
Political and economic uncertainty has been a significant factor in investors’ decisions to purchase gold. However, with the UK’s decision to leave the European Union still yet to have its full effects realized, it seems that this fear is not as high on people’s agendas anymore.
After the Brexit vote, gold prices initially dropped as people were more optimistic about their country’s future and felt less inclined to protect themselves.
With this uncertainty now gone, it appears that investors are turning away from gold once again due to its lack of return on investment.
4. Technology
As technology improves, it is becoming much more accessible for people to invest their money elsewhere. This has led investors to turn away from gold as they see that there are better ways of making a return on their investment than just hanging onto the precious metal.
This technology has also made it easier for investors to trade in gold if they choose to do so without having a physical store or dealing with a natural person.
5. The market is saturated
At the moment, many sellers of gold are willing to sell their products for cheap because they have too much. Unfortunately, this means that buyers can get their hands on more gold than usual at a much lower price, making them less likely to purchase it in the future.
The combination of these factors has led investors away from gold due to its lack of returns and the fact that there are many other investment opportunities available at this time.
