InvestorQ : Why has gold corrected so sharply in the last few months and where do you see gold prices going ahead from here?
diksha shah made post

Why has gold corrected so sharply in the last few months and where do you see gold prices going ahead from here?

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sara Kunju answered.
2 months ago
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Gold prices actually peaked out in August 2020 and has been on a downward journey since then. As of now, gold has already corrected around 16% since the levels of Aug-20, when it had peaked at Rs.55,922 per 10 grams in the Indian bullion market. Since August when global growth started reviving, gold has had a tough time holding its head above water.

The vaccine has been a major trigger for the correction in gold prices. With the successful trial and launch of the COVID vaccine and signs of economic growth reviving sentiments have changed. Gold has moved from being one of the best asset classes in terms of price performance to being one of the worst performing asset classes.

Its safe haven appeal appears to be waning for two reasons. Firstly, as the markets appears to have become a lot less risky, the need for a safe haven has reduced. Secondly, in the last few weeks, the market value of Bitcoin crossed $1 trillion and this rally has taken some of the sheen off gold since Bitcoin has many of the advantages that people look in gold.

Experts attribute see this price fall as temporary. They opine that the gold price fall has more to do with the sharp dollar rally and spike in US bond yields. Hence, they do expect the price of gold to bounce back as high bond yields in the market are unlikely to sustain at a time when global government borrowing programs remain at elevated levels.

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