Gold Prices have gone below $1,200 per ounce mark on Monday, hitting a record low since January 2017.
Investors keep gold to preserve their assets during uncertain political and economic conditions. But this time around they have invested in U.S. Treasuries as Turkish Lira went into a crisis situation. As the political relations between Turkey and the USA has deteriorated, Turkish President Tayyip Erdogan decided to raise tariffs on the US goods. Thus in just a couple of days, Turkish Ira has dropped by almost 25% against the US dollar.
Turkey’s vice president Fuat Oktay said these steps were taken in retaliation for US government’s intended attacks on the Turkish economy in the recent couple of weeks leaving Lira at the lowest price witnessed in ages.
A managing director at RBC Wealth Management George Gero said, “Traditional haven buyers of gold now find it too expensive in dollars. Government data on Friday showed that gold speculators hiked their bearish bet to a record in the most recent reporting week.”
New York’s SPDR Gold Trust (GLD) that is the largest gold-backed exchange-traded fund has also suffered. Its holdings have dropped by 10% from 25.3 million ounces.
Interesting: Who will benefit from the Cheaper dollar?
The strengthening U.S. dollar against not just Turkish currency but also Indian rupee has forced the investors to stop investing in gold and silver. Investors are now more interested in keeping the dollar instead of gold which is quite disturbing for the people. It means that the gold price might further weaken as the dollar continues to strengthen.