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Gold Plunges More Than $100 In One Day. How Do You Like It?

gold plunged more than $100 two days ago and it even dove below the key $1,900 level at one point on Wednesday. As the chart below shows, the London Gold Fix dropped from $2,044.50 to $1,939.65, or more than 5 percent, the worst fall in one session during the past several years. The price of silver plunged even more, from $29 to $24.40, which is more than 15 percent.” data-reactid=”12″>Tuesday was hot! And I don’t mean the weather. I mean that it was a remarkable day for the precious metals. The price of gold plunged more than $100 two days ago and it even dove below the key $1,900 level at one point on Wednesday. As the chart below shows, the London Gold Fix dropped from $2,044.50 to $1,939.65, or more than 5 percent, the worst fall in one session during the past several years. The price of silver plunged even more, from $29 to $24.40, which is more than 15 percent.

What’s Next for Gold?

Some people believe that the recent plunge means the end of the bull market and that gold should go lower now. One of the major arguments behind this opinion is the improving epidemiological situation in America. Indeed, as the chart below shows, the U.S. daily infection rate is dropping slightly, which creates also better economic prospects.

American economy will now only strengthen.” data-reactid=”53″>Well, the improving epidemiological situation and followed better economic prospects are definitely the headwinds for gold. It might be the case that most of the worst news related to the coronavirus pandemic is already priced in. And that the American economy will now only strengthen.

public debts, geopolitical concerns and risk that all the injected stimulus will translate one day into inflation – and that the central banks will allow it to rise above the target.” data-reactid=”59″>There are also other risks present. The dollar may rebound, while the real interest rates can go up. But these risks are always with us and we monitor them closely. However, the truth is that – from the long-term point of view – nothing changed this week in the fundamental outlook for gold. The Fed will remain dovish for an extended period of time, which means that the interest rates will remain at ultra low levels for years (as Powell has admitted recently: hikes are not likely to happen for a very long time). So, we still have lax monetary policy, unsound fiscal policy with rising fiscal deficits and public debts, geopolitical concerns and risk that all the injected stimulus will translate one day into inflation – and that the central banks will allow it to rise above the target.

Sign up today!” data-reactid=”61″>If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

economic calendar.” data-reactid=”62″>For a look at all of today’s economic events, check out our economic calendar.

 

article was originally posted on FX Empire” data-reactid=”65″>This article was originally posted on FX Empire

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