Gold Price Down in AUD Terms: Key Factors to Consider
The gold price in AUD terms is down to $2,488 today, continuing a steep plunge as the market continues to confound.
With US riots, a world awash in stimulus, and consequently a resurgent market, the latest move in the gold price could be confusing for investors.
Today we unpack why the gold price is down and whether now could be an ideal time to add to your gold holdings.
You can see the recent steep fall in the gold price below, with a smaller red bar today versus yesterday:
You can see the current gold price is resting just above support at $2,475, which dates back to March.
In a brand new report titled ‘The Looming Aussie Recession and How to Survive It’, Nick Hubble reveals why a recession in Australia could be inevitable and three steps to recession-proof your wealth. Click here to receive your free report.
AUD resurgence hits gold price
A stronger Aussie dollar is certainly part of the equation, you can see what’s happening with the AUD at the moment below:
The AUD is trading at US 69.5 cents with resistance at 70 cents in the offing, gold in AUD terms may find a floor soon.
But what’s driving the AUD higher from its March lows?
Part of it could be faith in the Aussie economy, which is starting to gain momentum after a short, sharp lockdown period.
The major factor though, I believe, is the perceived strengthening in demand for Aussie commodities like iron ore. In fact, mainly iron ore.
You can see what’s happened to the iron ore price in the last month below:
Source: Business Insider
Importantly, this is iron ore priced in USD which is up to nearly $100.
This movement in the iron ore price can be traced back to Brazilian supply worries.
The country is getting hit hard by the coronavirus, for now.
Is now the time to buy gold?
There are a variety of factors at play in assessing why now might be a good time to add to your gold holdings.
Consider the following:
- AUD/USD pair approaching resistance
- US-China trade war accelerating amid Hong Kong tensions
- Brazil eventually returning to supply equation
- Chinese demand for iron ore hinges on Western demand for finished goods
- Debt in Europe and US could hamper further stimulus efforts
All of this points to the plunge in the gold price being potentially short-lived.
If you want an in-depth case for why the gold bull could keep charging, and the five-step process behind it, be sure to download the 2020 Pandemic Roadmap Report.
Inside you will learn about the drastic changes to the financial system that are afoot and the long-term implications these changes will have for gold.
For The Daily Reckoning Australia