Why is the price of gold trending down?
Summary
The price of gold has dropped in 2024 despite global conflicts because high inflation and rising interest rates make other investments more attractive. The war between the US and Iran has pushed up energy costs and inflation, but strong US interest rates and a strong dollar have pressured gold prices downward.Key Facts
- Gold prices fell from $5,303 per troy ounce in late January to $4,235 in May 2024.
- The US and Israel attacked Iran in February, leading to a prolonged war.
- Iran blocked the Strait of Hormuz, causing energy prices to rise and inflation to increase.
- US inflation reached 4.2 percent, the highest in three years.
- The US job market remains strong, reducing chances that interest rates will be cut soon.
- Higher interest rates make gold less attractive because gold does not pay interest or dividends.
- A strong US dollar usually lowers gold prices since gold is priced in dollars.
- The Federal Reserve may raise interest rates later in 2024, which could keep gold prices under pressure.
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