Gold Price Falls, Is this a Chance to Buy in Before the Next Run?

Gold Price Falls, Is this a Chance to Buy in Before the Next Run?

Gold spot prices hit an all-time high last week, rising to about US$2,075 an ounce. Overnight though, they tumbled. At time of writing gold is trading at US$1,891 an ounce.

Even with the recent drop, gold has still given a 25.70% return so far in US dollars this year. Not too shabby!

It’s a similar story for gold prices in AUD. After reaching a high of $2,873, gold has dropped to $2,654. Year-to-date, gold has returned 22.59% so far after the fall.

As a result, many of the ASX gold miners are trading lower today.

At time of writing, Evolution Mining Ltd [ASX:EVN] is down by close to 6%, St Barbara Ltd [ASX:SBM] lost 5.85% and Northern Star Resources Ltd [ASX:NST] dropped by 5.29%.

Gold’s dip shouldn’t have taken you by surprise

If you have been following our in-house gold expert, Shae Russell, gold’s dip shouldn’t have taken you by surprise.

After gold reached an all-time high last week, Shae told Daily Reckoning Australia readers to wait to buy gold.

Here is exactly what she wrote:

Consider today’s all-time high as reminder to buy gold soon, but not the reason today.

After a spike the price falls, and that’s when you should call your bullion dealer. 

You’ll get the chance to buy gold at a lower price. You just need to be patient.

Those new highs the market is getting all excited about are just a clue there are even bigger ones ahead.

But history says you’ll be able to get gold cheaper if you wait a few weeks for the rally to die off.

You can read Shae’s full article here.

Gold could go higher

Gold prices dropped after Russian President Vladimir Putin said Russia was the first country to approve a vaccine against COVID-19.

The positivity drove investors out of gold, which is considered a safe haven. It pushed US markets higher, along with the US dollar.

After hitting a 0.51% low last week, which helped the gold rally, the US 10-year Treasury bond yields increased too.

Still, we think there are plenty of factors out there that could shake confidence and send gold prices higher.

For one, there’s quite a lot of scepticism on Russia’s vaccine claims.

As Reuters said:

The vaccine, which will be called “Sputnik V” in homage to the world’s first satellite launched by the Soviet Union, has however not yet completed its final trials.

Moscow’s decision to grant approval before then has raised concerns among some experts. Only about 10% of clinical trials are successful and some scientists fear Moscow may be putting national prestige before safety.

And there are geopolitical tensions, the trade war, high debt low-interest rates and the pandemic…

Gold’s rally may not be over just yet.

If you are looking to get exposure to gold, check out Shae Russell’s step-by-step guide: ‘Best Way to Buy, Sell and Store Gold’ here.


Selva Freigedo