Have you gone through the flashy days… When will the weak gold price rise?

Gold prices soaring without knowing that the sky was high is sluggish. Experts point out that eased sentiment for safe assets is a key factor in the decline in gold prices. The rise in US Treasury yields in anticipation of an economic recovery is also a cause of downward pressure on gold prices.

On the 2nd, on the Chicago Merchandise Exchange (CME), gold futures priced at $1728.4 per ounce. On the 8th of last month, it was slightly higher than when it was lowered to 1680.8 dollars after paying 1700 dollars.

The price of gold soared to $2097 per ounce in August of that year as the novel coronavirus outbreak (Corona 19) hit the financial markets around the world last year. This is because the demand for safe assets surged as the economy was paralyzed by the spread of Corona 19.

But in recent years, gold prices have returned a rapid rise. Gold, which had fallen to the second half of $1700 in November last year, soared to $1,900 earlier this year, but now it is approaching the level of $1,600, just before the coronavirus outbreak began to spread.

The biggest reason for the drop in gold prices is because the preference for safe assets has been undermined. The fear of the virus is gradually easing as the vaccine vaccination for Corona 19 is in full swing, especially in developed countries such as the United States and Europe.

In the stock market, economically sensitive stocks, which have been sluggish so far, are being shaken.

Kim So-hyun, a researcher at Daishin Securities, said, “The price of gold rose as the demand for safe assets increased rapidly due to the Corona 19 outbreak.”

With the spread of the Corona 19 vaccine, expectations for economic recovery are growing, and interest rates are also rising, which is also a burden on the gold price. The US 10-year Treasury bond rate has recently risen to 1.744% per annum. The Treasury bond rate, which was less than 1% at 0.93% per year earlier this year, jumped 0.8 percentage points in just three months.

Gold is not an asset that gives full interest like a deposit, but is a’no interest asset’ that has its own value. It is an unattractive asset in a situation where the’money price’ (interest) rises.

Shim Soo-bin, a researcher at Kiwoom Securities, said, “Gold is an asset that does not pay interest. It is natural that if interest rates rise, investment attractiveness will fall.” It will fall further.”

However, the lower gold price is expected to be supported as the US central bank (Fed) has said it will still maintain its monetary easing stance.

The fact that the Fed continues to release money into the market to maintain its low interest rate stance is a factor that devalues ​​the dollar. Gold is an asset denominated in dollars. If the dollar declines, gold can be relatively strong.

In response, experts predicted that the gold price in the first half of this year will show a flow of box volumes centered around the 1700 line.

Song-ryul Lee, reporter of Hankyung.com [email protected]

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