Who tarnished the gold price?
Various explanations have been given for the metal’s current behaviour, but no clear picture has emerged
Sherlock Holmes famously solved the Hound of the Baskervilles case by asking: "Why did the dog not bark?" The same could be asked of the gold price. Global stock markets are, with some notable exceptions, riding at or close to record highs, inflation is widely thought to be on its way back, and the world seems to be on the brink of a global trade war. Yet not only is the gold price not rising, it is actually falling. The gold price in dollar terms has just dipped below its year-to-date level of $1,224 an ounce. What’s going on here? The most widespread answer to that question is: "rising interest rates". The yield on the global benchmark for interest rates, the US 10-year treasury bond, breached 2.5% earlier this year, breaking a trend evident since the global financial crisis in 2008. It is now higher than that, at 2.9%, and JPMorgan CEO Jamie Dimon said recently it’s likely to go up further and breach 5%. "US interest rates are like kryptonite for the gold price," says one gold in...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.