The price of gold has been on a 12-month rollercoaster ride – and ended the period within $4 of where it started.
This morning, bullion traded up 0.16% on its previous close, at $1,307.70 an ounce, well down on its price a month ago. On 20 February, it was worth $1,343.75 an ounce.
But gold was riding high compared with its price three months ago. On 20 December, it stood at $1,259.75, nearly $50 adrift of today’s price.
However, those traders and investors who take a long-term view may view these ups and downs with equanimity. On 20 March 2018, gold traded at $1,311.
In the intervening 12 months, it has swung round within a range of more than $170, or nearly 13%. Its high point came on 26 March last year, at $1,352.40, and its low was seen on 17 August, at $1,1178.40.
The gold-price trough for the 12 months – $1,178.40 on 17 August – did not coincide with the dollar’s high, which was on 7 March this year, at €0.8935. But there was a peak for the 12 months to date within a few days of gold’s low, on 14 August, when the price stood at €0.8817.
This was not to be surpassed until 12 November, when the price reached €0.8915.
Not just another commodity
Gold is renowned as a stable asset – bullion fans like to point out that an ounce of gold has, over time, bought the same number of loaves of bread as it did during the reign of the Babylonian king Nebuchadnezzar, who died more than 1,400 years ago. This reputation may be burnished by its near-stationary performance over the last 12 months.
But market players may fear there is little to trade on if the price is going around in circles.
This fear may be heightened if they look at the five-year record. On 21 March 2014, gold traded at $1,336, less than $30 different from its current price.
Traders should remember that gold is primarily a monetary asset and ought not be traded in the same way as commodity metals such as copper. It competes with other monetary assets, especially the dollar.