InvestorQ : Why has gold prices globally been sharply down after 2011 and which way will gold prices go?
Arya Nanda made post

Why has gold prices globally been sharply down after 2011 and which way will gold prices go?

Answer
user profile image
Deepa Salunkhe answered.
1 year ago


The price of gold has been on a virtual downtrend since September 2011. Of course, we are referring to gold in dollar terms. From a high of $1900 / troy oz it has fallen closer to $1100 / troy oz in a span of 4 years and now trades below the $1300/oz mark. There are a variety of reasons attributed for the end of gold as an alternate currency. Firstly, the dollar has been on a constant tear and typically the US dollar has been negatively correlated to the price of gold. Secondly, with the entry of ETFs large global ETFs like SPDR have started holding over 1300 tonnes of gold to back their gold ETF units. One needs to remember that SPDR today is the 6th largest gold holder. This investment demand has created volatility in the price of gold. So does that mean that gold will gradually lose its sheen as a store of value and a reserve currency? Not necessarily! One needs to understand the gold cycles over the past 50 years to actually understand the future of gold prices.