Funds

The price of gold is falling but will it come crashing down?

The price of gold has come falling down in recent days after setting new highs of over $2,000 per ounce of gold.

On Wednesday, the price of gold fell by over 5 percent to $1,927 per ounce just as days before it was on the verge of touching $2,100 per ounce.

Often seen as ‘safe haven’ investment in times of economic uncertainty, the price of gold has rallied significantly and boosted many funds that invest in the wider sector and exchange traded commodities.

As an example, since March, investors in the Blackrock Gold and General fund (that invests in mining companies) have seen returns touching 250%.

Alongside technology and healthcare shares, gold has been one of the best performing sectors for investors in recent months – albeit for defensive purposes.

However, when more certainty begins to develop, gold does have a habit of falling just as quickly as it risen and remaining subdued.

While it is too early to say the price of gold will come crashing down, hopes of vaccines and pick ups in economic activity appear to be pulling people away from a rush to safe haven investing.

Scenarios such as a second-wave of COVID-19 infections developing or big companies going under as government stimulus packages ease off could conversely see the price of gold going right back up.

Either way, so long as so much uncertainty remains, it seems unlikely that there will be a sharp and sudden crash in the price of gold – but it is worth paying close attention to.

If gold is of interest to you, you can read about how to invest in gold – which details a number of ways you can indirectly access gold without having to physically buy and store it!

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