Gold prices plummeted when the news of the Coronavirus scare spread, as a result the price of gold dropped. As the market continued to drop, a number of economic analysts raised their concerns regarding the declining price.
Many in the financial community believe that gold prices will continue to drop, as more people are becoming aware of the Coronavirus. One thing they are concerned about is that consumers will abandon gold altogether. If consumers see the value of gold dropping, it could cause a dramatic decline in the value of the dollar.
This is particularly alarming, since in recent years, gold has only gained value and is currently one of the strongest holdings against the dollar, the strongest currently. The price of gold, and its reserves, has been steadily rising in recent years. It will be interesting to see how long the Coronavirus scare lasts, or if it will cause consumers to start selling gold instead of spending it.
Meanwhile, interest rates on money are dropping all over the world. When interest rates fall, prices of any type of asset rise. This is due to the fact that the amount of money available for loans and credit will increase.
In the past, as interest rates have risen, prices of assets have declined. The Fed’s efforts to prop up the market have done nothing to help the economy. If there was something to fear, it should have been the interest rates, not the Coronavirus scare.
The global recession has set in, and the dollar has continued to weaken. Gold prices are down by about 60% since 2020. That is a big decline in a relatively short period of time.
With the economy in the doldrums, and interest rates dropping, the value of paper assets continues to rise. That’s because the amount of paper assets will increase.
With paper assets increasing, the dollar will continue to weaken. More countries will be forced to give in to currency crises, and that will hurt the United States’ image worldwide. This makes the problems of the global recession even worse.
The Coronavirus scare, and falling gold prices, may be a sign that the global recession has been delayed for another year or two. It is possible that the financial institutions are holding off on injecting liquidity into the market, which could end up hurting the stock market, and finally lift interest rates back up.
They may also try to tighten monetary policy, so as to maintain the confidence of central banks around the world. Gold will eventually recover, but only after central banks get serious about helping the economy. When that happens, gold prices will begin to climb again.
It is possible that gold prices will stabilize, and that we will be back in a recession within a year or two. It is also possible that gold prices will rise, as citizens demand the US dollar to strengthen, and the world falls back into recession.
The value of gold prices will vary from month to month, depending on whether the US economy is strong or weak. As long as there is an economic crisis, it is possible that gold prices will rise again.