Gold prices have witnessed a steady decline in the wake of peaks since
August last year even hit USD 1676.73 because of strong USD and the
surge of the U.S. bond interests in the first quarter. Then they
dramatically rebounded to USD 1916.57 as the currency turned to be weak
and the inflation was worsening. However, this rally was interrupted and
reversed by hawkish messages sent by the Federal Reserve (Fed) after
its meeting last week. My friend who is an anchor asked me whether gold
prices would experience staggering falls again after the delisting
announced by the Fed this time as it did in 2013. Factors playing a
dominant role in this concern are discussed herein.To get more news
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Gold prices started to deadly decline after peaking at USD 1700 in
early 2013 and hit USD 1180 in June. The main culprits for this are: on
one hand, the Fed embarked on delisting at that time, naturally posing
stress to gold prices under the context of the rally of USD; on the
other hand, the Central Bank of Cyprus (CBC) attempted to sell out gold
to take profits and save the market against the backdrop of the European
debt crisis, exacerbating the comprehensive steep slump of gold prices.
At present, the Fed embraces the same opportunity to plan for
delisting, which is expected to impose the same stress on gold prices.
However, the difference is located in the situation where no central
banks intend to sell out their gold reserves this time, causing less
severe downward pressure to gold prices as it did in 2013. Currently,
the global escalating inflation is conducive to gold as a hedge against
its worsening to some extent. It is expected that some speculators may
buy gold to ride a wave of the plummet in gold prices.
It is worth noticing that one reason for gold prices reaching a record
high last year is that central banks worldwide issued more currencies
for quantitative easing (QE), leading to the depreciation which was
quite beneficial to gold prices. However, it is predicted that other
main industrial powers may follow suit after the Bank of Canada (BOC),
the Reserve Bank of New Zealand (RBNZ), and the Fed have turned to be
hawkish. In fact, some nations have announced to increase interest
rates, including Russia, Brazil, Iceland, Hungary, and the Czech
Republic. As a result, gold prices can be affected adversely by
interest-rate hikes worldwide and the global trend of delisting in the
future to some extent.
In conclusion, influenced by all aforementioned factors conducive to
the slump, gold prices may see the massive plunge rife with ups and
downs again. The double bottom support level at USD 1676.73 is expected
to be exceeded and reach USD 1557. As for the major support level for
gold below, the view shared by all is the level at USD 1451, which is
hard to say at present. However, it will absolutely a golden opportunity
for investors to buy gold if its prices can fall back to this level.
The Wall