Gold prices edges closer to a four month low on Monday and financial analysts are predicting prices could fall as low as 12 per cent more before the precious metals market starts to make a recovery.
Gold traders continue to offload their gold holdings, weighed down by the announcement the US federal reserve will bring an early end to its stimulus measures.
Meanwhile, the US dollar, which enjoyed a spike several weeks ago and set precious metals off on their downward trend, is holding firm.
Gold price in overseas markets
Traders are steering away from precious metals at the moment in favour of brent crude oil which took a sudden drop following Iran´s nuclear deal with the West. China continues to amass the greatest wealth of bullion, but Hong Kong traders are still wary of the US Fed´s next move.
“The bears are still in control,” said one Hong Kong-based trader. “The key driver is QE tapering with markets eyeing some action at the December or January meeting.”
Traders are also keeping their eye on developments between the territorial dispute between China and Japan, the latter which is closely backed by the United States. If the situation gets any worse and tension escalates gold appeal will push up prices again.
Is it worth buying gold now?
Whilst gold prices are falling and are expected to stay low for several months, this is a great window of opportunity for investors to profit on gold. At the moment traders are turning their attention to natural energy resources market, but gold is a safe-haven and will spark into life again.
Given the precious metals market is expected to stay bearish for a while, this is a good time to add gold to your investment portfolio. It´s impossible to predict what central banks will turn their attention to next, but one thing for sure is that they will start buying gold again at some point because they need an investment product that is real and tangible.
The fall in gold prices this year is making it difficult for mines to produce the yellow metal at a profit. Many mines have already gone out of business and others have shut down temporarily. According to analysts, there are only four mining companies still worth over $10bn.
Some larger mines are planning to put new projects into production, but since the fall in prices, the projects have been postponed. The likelihood is that smaller mines will merge with larger mines which will affect domestic gold prices, but we should expect to see a rise in price.
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