Gold has been revered by mankind for its value and allure since 3,000BC when it was discovered.
However, today gold is (relatively) out of favour among investors. It has often been thus, it was unpopular for 20 years in the 1980s and 90s, slumping to a low of $360 an ounce In 2001.
It travelled upward, reaching a new high in 2012 at $1,834. It has been on a downward mode since, slipping back $1,241 at the end of June.
What is the appeal of a lump of yellow?
Gold has always been regarded as a safe haven when there is geopolitical uncertainty.
Gold is appreciated as protection against inflation and currency gyrations. Gold is a valuable tool for hedge fund managers and speculators because of it is, at times, volatile.
As in the girl covered in gold in the James Bond film – the yellow metal is appealingly simple. It’s relative rarity, its non-corrosive, malleable qualities are understood by everyone.
It is a heavy metal but can also be hammered out thin, or stretched into fine wire. Gold alloy is used in computers, electronics, medicine and dentistry.
It appeals because it can be handled daily via jewellery - a wedding ring, a gold chain - unlike many other financial assets.
China and India like it
China is the largest gold producer in the world at 355,000 kilograms a year. Whatever the production of gold, or movement of gold prices, it is likely to stay popular in the Indian subcontinent.
The Indians love gold and imported 521 tonnes of it in the first six months of 2017, compared to just 510 tonnes for all of 2016. They turn it into jewellery, coins and bullion. For them it represents a celebration of their culture, something to rely on when other investments fail.
So why is gold lack lustre?
Interest in gold revolves around uncertainty. Fear of the future drives gold prices up, for example, when there is a threat of war. After the UK EU referendum in 2016, the gold price rose – for a bit. It also rose when Trump won the US presidential election in November.
The current North Korean testing of nuclear missiles/US issue is supporting gold. The gold price has looked like a line of mountains for all of this year, but losing momentum.
Commentators say that the primary driver of a bearish gold price at the moment is rising global yields. Naeem Aslam, chef marekt analyst at US Think Markets commented in early July after strong US job figures: "The data has brough negative news for gold traders as there isn't anything in this [jobs] number whichis gong to put the brakes on an interest rate hike."
Interest rates have been very low since the financial crisis of 2008/2009. After many a false dawn, the feeling is that rates will rise. Hence the gold price continues to be under pressure.
Gold has continued to be constrained since early July when the European Central Bank, the Bank of England, and the Bank of Canada all hinted that they were considering a tighter monetary policy.US Treasury bill yields and the German Bund yields are trending up, putting more pressure gold.