Gold was lower again this morning, at $1,213.20 an ounce, a 0.97% decline.
This comes at the end of a troubled month for the yellow metal, during which its price has fallen from $1,230.75 on 29 October.
There have been highs and lows during the time since, with a peak of $1,235.50 on 2 November and a low of $1,197.55 on 13 November, but the general trend over the period has been downwards. Not since 7 November has it been above $1,230 an ounce.
Dollar puts pressure on bullion
On a three-monthly basis, it was looking a little brighter this morning than the $1,204.30 seen on 29 August, and the trough of $1,183.50 on 28 September was below the low point of the past month.
This was followed by a rally to $1,360.25 on 25 January, and then a few months later, by a jagged peak in which the price rarely dropped below $1,320. On 27 April, it broke through this support level and was to top $1,320 only once again, on 11 May, when it stood at $1,324.80.
It dropped decisively below $1,300 on 19 June and below $1,240 on 18 July.
In part, gold’s woes arise from the increasing attraction of the US , as America’s central bank, the Federal Reserve, raises interest rates, pulling funds into dollar-denominated assets. Gold and the dollar are, to some extent, rivals for funds seeking safety in troubled times, and the US currency, unlike bullion, produces a return.
Furthermore, dollars do not usually attract security and storage costs, as gold does.
In part, the success of such as , which allegedly share gold’s immunity from being faked or printed by governments, provided another alternative for those seeking safety, although the recent problems of cryptocurrencies may take the shine off them.
The “true store of value”
Finally, there is always a sizeable part of the trading and investment communities that are sceptical about gold, denying that it is a “real” monetary asset and pointing out that its most fervent supporters suggest it is simultaneously a hedge against both inflation and economic depression.
Interestingly, the five-year pattern of the gold price shows it has moved, in aggregate, very little. On 29 November 2013, the price was $1,245.25, just $32.05 lower than the current price, or 2.6% of today’s gold price.
There were highs and lows along the way, but essentially gold has spent the last five years going nowhere.