As tensions mounted between Russia and Ukraine followed by Greek tensions, low oil prices and economic instability in the Eurozone, we saw the price of gold started to skyrocket. However, it seems as though investors are starting to put these concerns behind them and abandoning safe haven investments. Today, we’ll talk about the dramatic fall in the price of gold that we’ve seen this month, what seems to have caused the price decline, and whether or not we can expect to see the price of gold move in the positive direction any time soon.
Gold Is On a Steep Decline
Following a strong January, the month of February has been an incredibly bad month for gold investors. On January 31st, the price of gold was at $1,283.78 per ounce. However, as the first of the month rolled in, the price of gold fell sharply. As a matter of fact, by February 6th, the price of one ounce of gold fell to $1234.05. Unfortunately for gold investors, that price decline has continued. Today, gold trades for just under $1,210 per ounce.
What Is Causing The Decline In Gold’s Price?
It’s important to remember that gold is a safe haven investment. That means that when investors don’t feel comfortable investing in major financial markets, they look to gold as a way to keep their money safe. That’s exactly why the price increased recently in the first place. As geopolitical tensions grew and economic conditions soured, investors got scared. As a result, they sold stocks and bought gold. However, many of their concerns seem to have died down quite a bit lately. Here are a few examples…
- Oil Prices – Throughout the past several months, we’ve been watching as oil prices seemed to be in free fall. Very recently on the other hand, the price of oil has started to stabilize and the free fall seems to be over. Therefore, oil investors are starting to become comfortable with going back to their standard every day investment…oil.
- Eurozone Stimulus – Another major concern investors had recently was the economic condition of the Eurozone. After sanctions were placed on Russia, Europe’s economy started to slide dramatically. Soon, we started to see changes for the worst in economic predictions almost on a bi-weekly schedule. The poor economic conditions in Europe scared investors, causing many to seek safe haven investments and driving the price of gold up. However, the ECB recently put a quantitative easing plan in place designed to drive the Eurozone’s recover; and it seems to be working. As a result, this is no longer a big concern for investors either.
- Positive Economic Data In The US – The United States economy is growing stronger and stronger by the day. Recently, we’ve seen several positive reports that tell us job growth is on the rise, and corporate earnings are following. All in all, economic data coming out of the United States is great! As a result, investors are pumping money into US stocks in hopes that consumers will start to spend more; ultimately leaving less money on the table for safe haven investments.
- Greek Tension Is Dying Down – Greek tensions have been on the rise as the New Greek government and the ECB didn’t quite get along. As a result, there were concerns revolving the eventual split between Greece and the rest of the Eurozone. However, Greece will continue to receive emergency funding from the eurozone and the tensions there seem to have died down; giving investors even more of a reason to leave gold alone.
