Gold Prices Decline Amid Market Turmoil

The price of gold has unexpectedly fallen further after reaching record highs last week, as investors were compelled to sell off the precious metal to cover losses in other areas of their portfolios. This decline comes on the heels of significant market upheaval triggered by recent tariff announcements from the United States.

Gold had garnered attention earlier this year, rallying by 15 per cent and peaking at a remarkable price of $3167.57 per ounce. This surge was driven largely by its status as a safe-haven asset amid rising geopolitical tensions and economic uncertainties. However, the recent downturn saw the spot price dip by 9.79 or 0.03 per cent in morning trading, signalling a move away from gold as some traders sought to liquidate positions in response to margin calls.

Despite this pullback, analysts suggest that the fundamentals supporting gold remain intact. Strong demand from central banks and the potential for the US Federal Reserve to implement interest rate cuts could stabilise prices moving forward. Lower interest rates typically enhance the attractiveness of gold, which does not yield any interest.

Market experts assert that the observed weakness appears more technical than fundamental. John Meyer, the head of research at SP Angel, noted that while it is normal for gold prices to decline during times of market stress, it is often the first asset to rebound once stabilisation occurs. This view positions gold as a vital store of value amid ongoing global uncertainties.

Analysts at Bank of America Securities highlighted the significant role of central banks in gold purchases, accounting for up to 50 per cent of non-commercial acquisitions in recent months. This substantial buying activity has provided a buffer against price drops, despite rising interest rates. The transition from a uni-polar to an omni-polar world has further cemented gold’s appeal as a safe-haven asset.

As global tensions escalate, especially following Beijing’s recent countermeasures against US policies, the safe-haven allure of gold is likely to remain strong. Market observers suggest that the current selling phase may represent an attractive entry point for investors, with firms like Goldman Sachs maintaining a year-end forecast of $3300 per ounce.