Gold price to lowest level since January

The Gold price has been on a downward trend since the end of February, hitting its lowest level in five weeks on Friday. Since February 27, the price of a troy ounce of gold has fallen by more than 5%, from around €1,190 to €1,127 per troy ounce. A kilo of gold became almost €2,000 cheaper in the same period, as the price dropped from around €38,200 to €36,250. The silver price fell from €560 to €516 per kilo in the same period, a correction of 7.8%.

Since mid-December last year, the gold price has been on an upward trend, right after the US central bank's interest rate hike. At the time, the price was still considerably lower than after the event, at less than €1,100 per troy ounce and less than €35,000 per kilogram. At the time, many investors saw an interesting time to get in, partly due to rising inflation expectations and the lack of a further rise in the US dollar.

Gold price slumps ahead of Federal Reserve interest rate decision

Drop in gold price

Why the gold price has fallen so sharply in recent days is difficult to say. One possible explanation is the expected interest rate hike by the US central bank. On 14 and 15 March The next FOMC meeting will be held, at which the Federal Reserve will most likely announce another interest rate hike. In the run-up to the last two interest rate hikes, the gold price also fell, only to rise again in both cases after the interest rate decision .

Of course, past performance is no guarantee for the future, but based on the last two rate hikes, you could expect a similar move again. Of course, there are numerous variables that can affect the price of the precious metal, making it impossible to make a prediction over the short and medium term.

The last two rate hikes were preceded by a decline in the price of gold (Chart via Bloomberg)