Cryptocurrency Information Bureau News: Gold prices plummet! The impact is due to easing geopolitical risks and declining expectations for interest rate cuts. Ng Jian Hao's analysis provides a detailed explanation! #goldprice #marketanalysis #investment
Video explanation
[For beginners] Gold prices taking a break? We'll explain the mystery!
Hello, this is John! I usually talk about the latest blockchain technology, but today I would like to change the perspective a little and talk about "gold," which is surprisingly related to our lives. If you think "gold seems complicated...", don't worry! As always, I will explain the current price movements of gold in a simple way so that anyone can understand.
Have you heard the news recently that the price of gold has dropped a little? In fact, it seems that the price of gold has been on a bit of a hiatus for the past few weeks. What is the reason for this? Let's take a look!
First of all, why is gold so popular? What does "safe haven" mean?
Before unraveling the mystery of gold's price, it is important to first understand why gold is attracting attention.
Gold has long been recognized around the world as something valuable. It is especially popular when the world is in a somewhat unstable mood.Demand for safe assets" It's like taking refuge in a sturdy shelter when a storm is coming. Gold is one such "safe haven" for money.
- For example,Geopolitical tensionsWhen the value of money rises. This is when there is a little tension in some part of the world, where relations between countries are likely to deteriorate or conflict may break out. At times like this, people become worried that the value of their money will decrease, and they tend to think, "I'll just convert it into gold for now!"
- This will lead to more people wanting to buy gold, which will make the price of gold more likely to rise.
You may have heard the term "emergency money," and this is exactly what it means.
So why has gold prices fallen recently?
There are two main reasons why gold prices have been declining a bit in recent weeks.
Reason 1: Has the global atmosphere become a little less tense?
The first reason is that the global tensions that have been a cause for concern may have calmed down a little.
In particular, there is a view that fears of a major conflict in the region known as the Middle East have eased somewhat. It is good news for us that the world is moving towards peace!
In this way, if the "tension mood" in the world eases even a little, more people will think, "Maybe I don't need to rush to the gold havens." As a result, the desire to buy gold will calm down a little, and the price will tend to fall.
Reason 2: A message from America's "money guardian"
Another big reason has to do with the American economy and the actions of the "money guardians" there.
This is where "FRB (F.R.B.)" This is the central bank of the United States. Like the Bank of Japan in Japan, it has a very important role in managing the flow of money in the United States and stabilizing the economy.
Recently, the FedInflation"I'm still a bit worried about inflation..." Inflation is when the prices of goods and services rise across the board. For example, a sweet that cost 100 yen yesterday might cost 110 yen today. If this goes too far, it will make our lives harder.
In order to curb this inflation, the FRB hasInterest rate cut"The pace of interest rates cuts is when the central bank lowers the "policy interest rate," the interest rate that serves as a guideline for banks to lend and borrow money. When interest rates fall, it becomes easier for companies and individuals to borrow money, and it is expected that economic activity will pick up.
If interest rates don't fall as much as we thought they would, that will be a bit of a headwind for gold. That's because gold doesn't generate interest just by holding it. If bank deposit interest rates don't fall much, there's a chance that more people will think, "Maybe other things that earn interest (such as bank deposits or bonds) are more attractive than holding gold?"
How is the market reacting?
In response to these changes in the situation, investors (those who buy and sell stocks, gold, etc. to make money) are beginning to rethink the future economic outlook and interest rate movements. They are wondering, "Maybe it will be a while before interest rates fall?" or, "If the world becomes less worrying, will gold's appeal temporarily decrease?"
According to the article, gold prices have actually fallen by about 1% over the past week, the first time this has happened in about three weeks.
In this way, investors' feelings about the market (calledInvestor sentiment") or the overall state of the economy of a country or the world (called the "Macro environment" These factors are all intricately intertwined and affect the price of gold.
John's comment
I found it fascinating that even though gold has been valued for thousands of years, its price can still fluctuate with world events and small policy changes by central banks. When I see news like this, I think it's important to understand how even something that is said to be "absolutely safe" doesn't always have a constant value, and to understand at least a little of the "why" behind this in order to understand what's going on in the world!
This article is based on the following original articles and is summarized from the author's perspective:
Ng Jian Hao: Waning Safe-Haven Demand Puts Pressure on Gold