As gold prices continue to drop, currently down $11.34 USD (0.65%), many are wondering what will happen to gold prices over the next few days. But more importantly, what will happen to gold over the next couple of years? Gold is currently at $1732.68, and it seems like it’ll continue it’s downward trend in the market in the short-term. After it’s recent losses, there were concerns that gold prices may pull a reversal and continue to grow. But over the past few days, gold failed to break through resistances.
Because of this, gold continued to drop due to a corrective pullback from the recent gains on gold prices. Right now, gold faces strong resistance at $1750.00. It failed to break through this barrier last week, but if it does, gold prices may continue to climb. However, gold will likely test lower resistances at $1720.00 and a further one at $1680. If it drops past these, then gold prices will continue their descent for the foreseeable future.
One of the biggest triggers for gold prices is inflation, and it seems that markets did not pay attention to Sunday’s events. Federal Reserve Chairman Jerome Powell commented on “60 Minutes”, that the Central Bank will continue to support the economy with all it’s resources until the country is financially fully recovered. He added that it will “be a while” before interest rates are raised from it’s current 0.25%.
Gold prices also suffered as both Chinese and US PPI data came above market expectations on Friday. Price level of goods saw growth of 4.4% last month in China, making it the largest growth since August 2018. This was 1.0% higher than the 3.5% many experts were expecting. U.S PPI also saw a growth of 1.0%, which is 0.5% higher than forecasted predictions.
All these signs are negative for gold, and do lead us to believe gold will fall. But what about the long term effects? As the world recovers from the pandemic, we have yet to see how the large amount of stimulus will affect it. It may cause inflation to rise to record high, which is great for gold prices. And many people will still be left without jobs after the economy reopens. We have yet to see the long term impact of this pandemic, and right now all the government has done is put a band-aid on it.
Over the next couple of weeks, we expect to see gold prices continue it’s downward pattern. For traders, now is the best time to sell your gold. However, over the next few months and even years, gold may grow and recover as the economy begins to feel the after effects of the pandemic. But it all depends on how the government responds over the next few months. And more importantly, how they transition back to a new normal.