Massive Drop in Gold Prices

Last week was the first trading week of 2021 and it was quite the eventful one. Early on in the week Gold prices remained stable and well over the $1900 (USD/Oz) Support level. Markets had just opened up, traders and government officials were coming back from their holiday breaks so markets were not as liquid, yet prices still soared mainly because of the fiscal stimulus package outlook for 2021. Midweek however was completely opposite of Gold’s optimistic start to the new year. Wednesday was when congress was supposed to certify all the votes Trump and Biden received during the election, however that was abruptly interrupted when a mob of Trump supporters broke into the Capitol. This unfortunate event did not have the biggest impact on the market, but what did was news that the Democratic Party would be able to claim another senate seat. This was just the beginning of the sharp fall Gold experienced last week. The drop was slightly over $100 (USD/Oz), nearly 5%. This drop occurred as a result of investors preparing for if the Democrats have more control than the Republicans in the White House. The US equities markets have also experienced bullish movements as a result of all this activity and news. Right now is a perfect time to buy into Gold and other Precious Metals. There is expected to be a larger increase in debt and inflation in the economy as a result of a potential larger stimulus package. Inflation only results in the price of the yellow metal to shoot upwards.

The week began modest for Gold, with prices rallying upwards mainly due to the idea of a larger stimulus package from the Biden administration. Early in the week Gold prices closed at $1951.35 (USD/Oz).

Midweek the yellow metal experienced a slight fall, the one that began the massive weekly drop. This resulted from the idea that the Democrats would be able to flip a senate seat in their favour. Midweek the price of Gold closed at $1921.92 (USD/Oz).

End of the week, Gold faced a massive blow which resulted in an even bigger drop. This was entirely a result of investors adjusting their economic outlook with a potential Democratic Party having majority control of the senate and Whitehouse. Gold prices ended the week off at $1847.33 (USD/Oz).