Reasons for the collapse of gold:
1. Changes in the exchange rate of the US dollar will also affect the price of gold. The price of the US dollar and the price of gold move in opposite directions;
2. Currency Policies will also affect the price of gold. If a country adopts a tightening monetary policy, the price of gold will rise;
3. When a country’s purchasing power increases, the price of gold will fall accordingly;
4. The stock market also has an impact on the price of gold. When investors invest a large amount of money in the stock market, the price of gold will fall;
5. The price of oil will affect the price of gold. When the price of oil falls, the price of gold will also fall. The above are the possible reasons why the price of gold has plummeted.
Changes in the exchange rate of the U.S. dollar will also affect the price of gold. The price of the U.S. dollar and the price of gold move in opposite directions; Monetary policy will also affect the price of gold. If a country adopts a tightening monetary policy, the price of gold will rise; When purchasing power increases, the price of gold will fall accordingly; the stock market also has an impact on the price of gold. When a large amount of money is invested in the stock market, the price of gold will fall;
Investors also have many ways to invest in gold. For example, you can invest in gold bars, gold coins, gold jewelry, etc. You can also purchase gold certificates, gold futures, gold funds, etc. to participate in gold investment. However, one thing investors need to know when investing in gold is that gold investment is a relatively stable investment. Investors do not have to worry about a sharp drop in gold prices, resulting in a huge loss of funds. Because even if the market plummets and the economy is in recession, the price of gold will not fall easily. On the contrary, the price of gold will rise as the market downturns.
The reasons why gold fell. Last week's plunge in precious metals cannot simply be attributed to factors such as the progress of Russia's vaccine development. It needs to be analyzed from the perspective of precious metals as assets that hedge against inflation. At the same time, it is also necessary to recognize the crucial role of liquidity in the financial properties of precious metals. And this determines the subsequent trend of precious metals. _
The revision of inflation expectations is more likely to be the main factor driving this round of decline in precious metals. However, a renewed shortage of liquidity will be the main factor driving a new round of decline. The logic of long-term rise in precious metals has not changed, and the most critical mid-term strategy is The time for bargain hunting is not coming soon
The essence of gold is an asset that hedges against inflation and pre-debt. Then the expectation of inflation is the fundamental driving force for the rise of gold, and it can also be understood simply and popularly as a hedge against the release of a large amount of liquidity by the Federal Reserve. First, from the perspective of the Federal Reserve's monetary policy, according to the basic Fisher formula inflation = nominal interest rate_ The real interest rate, the inflation level represented by monetary policy (purple line) should be equal to = the federal real interest rate (red) _ 10-year U.S. bond yield (green), and the market’s actual inflation expectations are measured by the yield on U.S. TIPS bonds. Expressed (yellow), we will find that the growth rates of the two have been significantly inconsistent since March. This deviation is actually that the market’s expectations for inflation have exceeded the level actually represented by the Fed’s monetary policy. There is a deeper meaning behind this. The deeper meaning is that the Fed's interest rate level can no longer continue to the level of negative interest rates as expected by the market. The market has slowly begun to realize this problem, and the oil price that has never been able to break through has made investors who continue to trade inflation expectations begin to make corrections. own logic.
In fact, the two have already reached an inflection point since last week (before gold fell), which means that the logic of trading inflation must return to the level shown by the Federal Reserve's monetary policy.
Or you can understand it as a correction of the monetary policy brought about by the Federal Reserve’s insistence not to implement negative interest rates under the pressure of the epidemic, which finally led to the market beginning to confirm, and this is also the main driving force for this round of gold decline