The fall in its price gold 29% of his high record in late January showed that precious metal can be considered a safe investment medium over time, but is offered only for long-term investors.
His explosive rise, from about $2,000 per ounce in February 2024 to the $5,594 high in January 2026, was reversed once the Middle East war. Last Wednesday his price dropped below $4,000.
Although traditionally favoured by uncertainty conditions – as happened in 2024 with Israel's war on Hamas and 2025 with Donald Trump's trade war – this time it moved against the current.
Its significant fall is mainly attributed to boosting inflation, due to the energy crisis caused by the war, and consequently the expectations that the US central bank (Fed) and other large central banks will increase their capital Interest rates, making investments in fixed income securities more attractive. The European Central Bank already announced in June the increase in the deposit rate to 2.25% from 2%.
According to other estimates, gold fell victim to the stock rally, which after the initial shock of the war moved up again, culminating in artificial intelligence and the technology industry in general. The liquidation of profits by private investors, who had bought gold at much lower levels, is likely also linked to its declining course.
History shows that the price of gold shows great reductions from high levels and for long periods of time. More typical is that after 1980, when his price had been ejected to the high then level of $680 after the second oil crisis, a period of 37 years followed with his prices moving to much lower levels.
Only after the major financial crisis, launched from the US in 2007, the precious metal moved to higher levels to reach over $1,860 in September 2011. He then began moving to lower levels for years until he exceeded $2,000 in 2020 with the coronavirus pandemic.
Investment funds in gold (ETFs) which were a key pillar of ejecting its prices over the past two years, have recently led the fall with daily outflows. On the other hand, central banks continue to demand gold, strengthening their position in their currency reserves.
A recent survey by the World Gold Council between central banks shows that these continue to be positive, with 45% reporting that the participation of gold in their exchange reserves will increase over the next 12 months.
Protecting against the risk of inflation and diversifying their portfolios are the main reasons that central banks hold gold, while covering geopolitical risks also plays an important role. On the other hand, 74% of the central banks surveyed see that less or more holding assets in dollars will be reduced over the next five years.
Source: RES-APA
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