Gold price to lowest level in three months

The price of goldReached This week the lowest level in more than three months, as a number of geopolitical and political uncertainties temporarily faded into the background. Earlier this year, the price of gold rose because of the threat of a missile launch in North Korea and a possible escalation in Syria as a result of the US missile attack.

Both geopolitical threats failed to materialise, causing investors to abandon the safe haven of gold in exchange for more speculative investments such as stocks.

The gold price has fallen further in recent weeks, after it became clear that not Marine Le Pen but the conservative Emmanuel Macron would win the elections in France. This removed uncertainty about France's possible exit from the Eurozone, a concern that was of particular concern to bond investors and currency traders. As a result, the euro became more valuable against the dollar. The exchange rate even touched $1.10 on Monday, the highest level against the dollar since November last year.

Gold price back to lowest level in three months

Gold price down 7.6% in four weeks

Due to this combination of circumstances, the gold price in euros has fallen sharply in a short period of time. Four weeks ago, a kilo of gold fetched more than €39,000, but at the time of writing you pay a price of just over €36,000 for the same weight. That's a drop of 7.6% in less than a month.

Analyst Joni Teves of Swiss UBS  expected that the gold price may come under further pressure in the short term, but that below the level of $1,200 per troy ounce, many bargain hunters will get in. At the time of writing, the gold price stands at $1,223 per troy ounce. However, investors are still cautious as the US central bank is likely to raise interest rates further this year.

Fed rate hike?

In theory, a rise in interest rates is negative for gold, but the Federal Reserve's last two interest rate hikes turned out to be the starting signal for a rapid rise in the price of gold. In the first two months after the rate hike at the end of 2016, the price of gold went up by almost 10%, while the yellow metal even shot up more than 15% in the two months after the December 2015 rate hike.

Gold has become cheaper again