Gold Hits Five Months Low Indicating End of Safe Play
The continuous decline in gold price amid global recovery indicates that the investment in safe asset has come to an end.
The continuous decline in gold price amid global recovery indicates that the investment in safe asset has come to an end.
10 ส.ค. 2564

Concerns over the faster-than-expected rate hike by the U.S. Federal Reserve and the economic recovery continued to pressure non-interest-bearing holders into further selloff, sending Gold prices to plunge as low as $1,742 per ounce on Monday.
 
Once being a safe asset for investors to avoid volatility in the stock market amid Covid-19 outbreak, which sent spot price for gold to the level not seen before at the closing of US$2,064 per ounce in August 2020, investors are now turning down gold to seek for much riskier assets in the equity market as the global economy shows signs of recovery from earlier decline.
 
The decline continued over the weekend and extended to Monday after the U.S. Labor Department showed employment in July rose to nearly a year high while wages continued to rise.
 
In the meeting last week, Fed’s statement implied that the fiscal stimulus this year is to speed the economy’s recovery, which would allow the Monetary Policy Committee to consider unfreezing the interest rate that is currently maintained near zero by early 2023.
Moreover, the data also helped lift the U.S. 10-year Treasury yields, resulting in less appeal in gold as an inflation hedge.
 
Despite the resurgence of Covid-19 Delta Variant in many countries, including the U.S., the global economy remains more or less bullish, seeing major indices in Wall Street hitting a record high and better earnings season in the second quarter of 2021, the chance of gold price to reach the US$2,000 per ounce mark seems highly unlikely.