US tariffs and trade wars can reduce the value of the euro and other countries’ currencies. This situation will make buying gold more expensive for buyers who use the currency of other countries. This is the reason why gold prices are falling. US investors are also now placing big bets on the stock market and bitcoin.
Since Donald Trump’s victory in the US presidential elections, gold has become cheaper by about five thousand rupees. Commodity market experts say that no positive factor is visible in the medium term. In such a situation, the price of gold may continue to fall in the coming times.
According to the data of India Bullion and Jewelers Association, the price of gold in India on November 6, the day of Donald Trump’s victory, was Rs 78,566 per 10 grams, which has come down to Rs 73,740 per 10 grams by November 14. During this period, the price of gold has decreased by Rs 4,826 or more than six percent.
Gold will become cheaper
Jatin Trivedi, Senior Research Analyst, Commodity and Currency at LKP Securities, says that gold prices are likely to fall further in the near future, as sellers dominate and there is no positive sign in the near term. The US central bank Federal Reserve continues to cut interest rates as inflation approaches its target.
However, now with the inflation rate being higher than expected there, there is concern that the Federal Reserve may stop further cuts. This has increased the pressure on gold prices. Sandeep Raichura, CEO of PL Broking, says that a tariff war is almost certain. Therefore, the US dollar has risen significantly, which is a negative factor for gold.
Why are gold prices falling
US tariffs and trade wars could reduce the value of the euro and other currencies. This will make gold more expensive for buyers who use other countries’ currencies. This is why gold prices are falling. US investors are also now betting big on the stock market and bitcoin.
Also, the Federal Reserve will not be able to cut interest rates aggressively during Trump’s reign. This means that Treasury bonds will continue to pay more interest than before and this can also hurt gold prices. Gold directly pays zero dividend or income to its owners. So when bonds are paying more, gold can obviously look less attractive.
Of course, gold still remains the safest investment for investors when the situation around the world is unstable. Whether it is a matter of war or political conflict. Investors often turn to gold in an environment of global instability. War is still going on in the Middle East, Ukraine and elsewhere. Political tensions are still as before. In such a situation, gold will probably remain in the portfolio of many investors.