Gold is an approved investment asset which investors have utilized for ages. Not only is it pretty cool to hold gold in its physical form, but, it also provides a multitude of benefits. Those who hold gold claim its extremely diverse compared to other assets such as equities, bonds, or cash. Investing in gold allows you to create a hedge against inflation, diversify your portfolio, and avoid counterparty risks. Gold is also extremely liquid and non-volatile and can be held outside of the banking system. It’s the most popular metal in the world. It’s highly malleable, can be shaped or sculpted, a great conductor of electricity, and indestructible. These properties make it a choice metal for a variety of industries, such as the medical, electronics, and even space sectors. Gold’s performance in 2017 was positive despite the cryptocurrency mania. Its performance this year has been somewhat mixed with gold prices taking a tumble. This month’s (July’s) downward trend is a continuation of June’s downward trend. Factors such as tension triggered by potential trade wars, and a strong dollar heavily influenced gold’s low prices.
Price Performance for the Month of July 2018
1st of July, 2018
Gold prices have a negative correlation to stock/dollar prices. If dollar/stock prices strengthen, gold prices tend to lower and vice versa. Unfortunately (for gold investors), gold prices have taken another tumble as the dollar continues to strengthen (good for the dollar). The dollar index recorded a 0.1% climb to 94.701. On the first day of the month, gold prices hit a new low of $1,252 per ounce. Demand for gold in India rose substantially as gold prices hit a 3 month low. Gold demand in Asia remained lukewarm as investors waited for prices to fall further. Prices remained low in the midst of North Korea’s denuclearization programme, as well as with underlying inflation.
2nd of July to 6th of July, 2018
In the week beginning on the 2nd of July, the gold price per ounce was $1,241.90. This represented an 8% dip from April’s high gold prices. The dollar continued to strengthen fuelled by a stronger US economy and prospects of a further rate hike by the FED (Federal Reserve). The U.S. – European Union trade renegotiations has also put a strain on gold, encouraging the purchase of other metals such as Palladium and Platinum. Fears of a trade war between the US and China strengthened the U.S dollar against other currencies. As of Friday the 6th of July, the price of gold per ounce was $1,255. A steady price rise fuelled by a weakened dollar and equities.
9th of July to 13th of July, 2018
In the week beginning on the 9th of July, gold price per ounce was $1,257.42 which was its highest price since June 26th. The high gold price was supported by a weak dollar that fell to its lowest since June 14th. Also, trade tensions between the U.S. and Sino and Brexit uncertainty supported a gold price rise. U.S. President Trump also suggested that China was hindering U.S. efforts to denuclearize N. Korea. At the end of the week, Friday the 13th of July, the gold spot price hit a low of $1,241.26. This was partly fuelled by uncertainty over the U.S. – China trade war. The price of gold slid into a seven month low with demand for gold reducing significantly.
16th of July to 20th of July
On the week beginning on the 16th of July, gold prices slightly recovered from their seven months low to hit a price of $1,240.72. The dollar dipped and continued to trade below its previous highs. Ongoing trade disputes between China and the U.S. have failed to benefit the gold spot price. Also, the cost of holding any gold has risen along with high U.S. interest rates. This has lowered demand in top-consuming regions such as China and India, with India’s consumption falling to a 6 month low. At the end of the week, the 20th of July, the price of gold fell further to hit a price of $1,231.78 per ounce. Although trade war tension should strike a gold price rise, investors were unwilling to hedge their chances.
23rd of July to 27th of July
On the week beginning on the 23rd of July, gold prices lowered further to hit a price of $1,224.79 per ounce. Gold has strenuously struggled amidst trade war disputes. The dollar rose after President Trump’s intervention. He said that he was ready to impose tariffs on $500 billion of imported goods from China (based on a trade deficit). He threatened to escalate the trade war further, a move that unnerved the financial market (keep in mind, in his pursuit of trade fairness, some of China’s responses to him have also escalated the situation). He also had a war of words with Iran president Hassan Rouhani which helped lift the dollar price briefly. The surge in the dollar caused gold’s price to tumble 10% since mid-April. The dollar continued to strengthen on expectations that the FED would further raise interest rates. The week ended with gold hitting a lower spot price of $1,223.07 per ounce on the 27th of July.
30th of July, 2018
On July 30th the price of gold was $1,221.50. This represented another tumble for the asset’s price as the dollar remained strengthened. There was a lack of investor interest in gold. However, this represented an opportunity for buyers to buy at lower prices. The low price was fuelled by the fact that investors expected two more rate hikes for 2018 and also in the next 3 years from the FED. The U.S. also signaled that it intended to push ahead with talks with both Canada and Mexico after suspending tariffs with Europe in a deal that may renew pressure on China. While the price of gold per ounce remains low, investors are speculating that they will recover to above $1,300 soon.
Gold is the most popular investment asset in the world. Its existence as an investment asset probably won’t change in the future at all. This is made possible by the fact that gold is rare and in a finite supply. We are hopeful for the future of gold especially gold and blockchain technology mixed together in tokenized gold. Extra expenses such as storage expenses and security measures can be completely eradicated in the quest to hold gold. Our DinarCoins are our cryptocurrency pegged to the price of gold. We believe that our DinarCoins are alternative ways to help your personal finances become more diverse and flexible.