Gold is traditionally a first-choice investment for anyone who wants to preserve his/her fortune and protect it against rising costs. However, when considering buying or selling, there is a major question on every mind: Will gold prices go down? The solution is not straightforward since there are a number of factors, which drive gold prices. In this article, we shall have a detailed discussion on what is currently taking place in the gold market and what can be anticipated in the next few months.

Current Price of Gold

The cost of gold has been steadily rising in recent years, driven by uncertainty in economies, monetary policy actions of central banks, and concerns about rising inflation. In 2023 and in early 2024, gold reached record highs, surpassing the $2,000 an ounce barrier on more than one occasion. Yet, following each spike, there is a pullback, leaving market players questioning when a drop in price is due.

Factors That Can Make the Price of Gold Go Down

While it is firm, there are some factors which may send prices lower:

Interest Rate Increases

The U.S. Federal Reserve is a primary driver of movements in gold. With an increase in interest rates, the selling of gold is witnessed as funds migrate toward interest-bearing assets like bonds. If the Fed continues keeping interest levels constant at current levels or raises interest levels, short-run declines in gold can be expected.

Strengthening of U.S Dollar

Gold is priced in U.S. dollars, so when a stronger U.S. dollar makes it more expensive for foreign buyers, it can lead to lower demand and lower prices. If a stronger U.S. dollar is maintained, it can apply downward pressure on gold.

Stock market revival

If there is a strong increase in global stocks, investors can pull funds away from gold and into stocks, resulting in a drop in gold prices. An active stock market usually results in lower demand for safe havens such as gold.

Lower Inflation Expectations

Maybe the greatest reason for purchasing gold is its utility in being a hedge against inflation. If inflation begins to decelerate and central banks manage to cap rising costs, part of its appeal as an inflation hedge is lost, which can lead to downward movements in its price.

Reasons That Can Support High Gold Prices Or Push Them Higher

Meanwhile, gold can continue to remain firm, and even strengthen, due to these reasons:

Political uncertainty.

Wars, conflicts, and geopolitical tensions drive investors toward safer-havens like gold. With perpetual geopolitical uncertainty, there can be a staunch demand for gold.

Central Bank Purchases

Several major central banks, especially in India and China, have been adding more gold to their reserves. Sustained buying by central banks can be a big support for gold prices.

Economic Slowdown or Recession

If a deceleration of the global economy, or a recession, occurs, investors can pour in for its protective purposes, maintaining its levels above. Should I Buy Gold Now Or Wait? Marking time is hard, however, and gold is an excellent investment in the long term. If short-run profits are your goal, awaiting a drop in price can be a thought. However, when it is a question of maintaining your fortune and diversifying your portfolio, buying gold on a periodic basis (dollar-cost averaging) can be an excellent idea. 

We have great deals on a wide variety of different gold coins and bars, which help protect your fortune when it matters. With its lasting popularity, gold is a great asset in a rising market, a falling market, or pretty much anywhere in between. 

Final thoughts

While short-term fluctuations can be expected, gold is well-rooted in its ability to sustain its value in the long term. If it declines slightly or keeps rising, the long-term for buying gold is healthy. If buying gold is on your mind, AU Bullion is here for you, featuring great deals on coins and gold bars.