Zlat horeka faded. This is how the results of gold could be interpreted in July, when the first losses took place after five growing months. The yellow metal weakened the most of the entire commodity market and reached the lowest prices since the end of April. What do these declines mean for investors?
Interest in investing gold has been unprecedented in recent months and has pushed for demand for minutes. Raba gold coins reached several-record records. A little less of an interest in gold bars.
Anyone who preferred paper gold to its physical form has invested in gold funds, investment certificates or stock company events. The game played with panic during the uritch period. This situation occurred at the turn of May, when investors were massively disposing of stocks and other commodities and investing in gold, or other safe assets.
What caused the price to fall?
However, the situation has changed in recent weeks. Gold weakened by six percent in July, in sharp contrast to the rest of the rapidly growing commodity market. Probably most of the gold was due to the fact that the fear of the debt crisis of other eurozone countries has passed, even if it has receded into the background.
The European banks managed to refinance a loan of more than 442 billion euros from the European Central Bank on the arrest in July, which meant a tough year for gold as a store of value in times of uncertainty.
The sweat of the results was listed by a list of companies in the USA, which carried themselves in a positive spirit and on the right to knock. More than 80 percent of the results so far were more than an analyst, which strengthened the shares of individual companies. When the penultimate July bird saw the results of the stress test of European banks, which were very positive, gold received further impact. By the end of the month, these losses could not even be corrected.
Where is the decline in demand for gold most pronounced?
The demand for gold investment weakened the most, which pushed it up in the past months. For a very long time, this can be seen in the amount of physically scrap metal, the largest gold fund SPDR Gold Trust, which fell by 2.8 percent to 1,282 tons during the month.
Although some declines were visible at the end of the year, the July one was the highest. In addition, with the end of the month, the drops of marrow metal deepened. The declining volume is thus indicated by the declining number of speculative purchase contracts on commodity exchanges. These are proof that investors in gold are worth a lot. The number of contracts still stands above average this year.
Sell, repent or buy?
The approach of the investor is currently much more obese. He clings to the buyers and tries to time the market entry. Even optimists in the long-term growth of gold do not rule out short-term declines. At least until then, it does not allow holiday optimism and the slowdown in the worlds of the economy, which began at the end of the second quarter of this year, is beginning to show.
For long-term investors, this July fluctuation does not necessarily mean anything. For each type of investment, price volatility is determined. In addition, such a fluctuation in gold occurred after reaching historical highs at the end of June, when a correction could be expected.
If we take into account the performance of individual commodities since the end of the year, we still see an above-average appreciation of gold, which is currently at seven percent. However, the fall in prices can be seen as a suitable baldness to buy.
If the investor decides to increase his position in gold, the current depreciation of the koruna will cost him another few percent. It is up to each investor how to deal with the current situation. The day of the investment is uncertain, even in terms of the most secure financial asset – gold.