Gold prices fell by 2.2% or by $ 25.10 and closed the Monday session at $ 1106.80 an ounce, the lowest close in five years, amid expectations by some analysts the closure of the precious metal below $ 1,000 by the end of this year, revealed a report published by “The Independent” for The reasons for this, and how China and Greece have contributed to this decline?
Gold prices fell due to the enthusiasm of investors to buy high-yielding assets such as currencies, as the president of the Federal Reserve, “Janet Yellen” I expected a rate hike before the end of this year, which would grant market confidence in the US economy and the continuation of his recovery, making dollar push upward.
In the meantime, the Eurogroup agreed on a third rescue program for Greece, which reflected positively on the confidence in the single currency bloc’s economy, and no need to hedge the precious metal as a safe haven.
On the other hand, the recent decline in gold prices affected the sale of Chinese investors a lot of the precious metal in the wake of the Beijing Declaration on Friday for reserves of the yellow metal for the first time in 6 years, which jumped 57% to 53.32 million ounces, as China is the largest consumer of gold in the world, and therefore the announcement of the acquisition more of it be negative for investors.
Gold price Accept a lot of investors to buy gold as a safe haven during periods of economic uncertainty, while experiencing the metal prices of precious retreat from highs in 2011, and that in times of high inflation rate, the precious metal attractive to buyers because of the diaper on the value of comparable assets Calcndhat and other currencies.
The US government intervened to stop the occurrence of the economy under the clutches of recession in the wake of the financial crisis in 2008, which launched a program to buy bonds and stimulate companies to borrow to support investment, this program ended in October / October last with to keep interest rate near zero to support the economy.
But in light of the Federal President of expectations “unrelenting” and the Governor of the Bank of England “Mark Carney” near making a decision to raise interest rate, investors about their money away from the gold and turned to buying currencies that are rising.
When you drop the price of gold, countries that bought a lot of the precious metal such as Russia, Turkey, Azerbaijan and Kazakhstan, which increased the possession of gold during March affected.
Moreover, mining companies and investors will suffer from the decline gold prices to their lowest levels in five years, along the lines of what happened from the drop of the shares of Australian mining sector by more than 13% at the beginning of the trading session on Monday.
It has long been relying on gold as an indicator of economic – particularly to monitor inflation movements – over the past 15 years, but fundamental changes in prices can send letters to the markets that the global economy has changed somewhat in light of expectations of higher interest rates in the United States which will affect course borrowers.
What he did not mention the British newspaper report that the rise in the stock, “Wall Street” to record levels contributed to the withdrawal of liquidity to high-risk assets, and then affected goods with high dollar and gold fell.