In recent months gold has seen its biggest rally since the 1970s, reaching a record high of $4,381.60 on 20th October. With this being a record high for the price of gold, many experts believed that it would be followed by a drop in price if historical trends are to go by; which is exactly what happened as a week later the price of gold had fallen by 8.1% to $4,025.07.
This drop was particularly steep on 21st October when the price of gold fell 5.3%, the biggest single-day drop in more than a decade. At the time of writing, gold price is currently sitting at $3963.39 and while this is still high compared to recent years, it still shows a significant 10% drop from its record 20th October high just last month.
Why is gold demand falling right now?
Gold demand is falling right now predominantly because of reduced geopolitical instability, along with ongoing trade negotiations. However, if we consider historical trends, inevitable drops in price are typically followed by a surge. If this is to happen, you might argue that investors should take advantage of the current more affordable gold price because it might be a small window of opportunity.
As the price of gold retreats from a record high, is now the time to invest?
Having said that, gold investment should not be dependent on whether the market is either surging or falling; you should be more focused on whether your financial situation enables you to do so at that particular time. Gold should always be seen as a long-term investment strategy.
The time is right if you have the funds, you are in a financially stable position, and you’re looking for an investment that will store value long-term without thought towards any short-term price fluctuations.
Gold should not be looked at as an asset you react to impulsively. Remember that gold is a long-term investment, not a short-term trade, and market fluctuations are a natural part of the cycle, not a reason to panic. If you have invested in gold for the right reasons, which are long-term financial storage, short-term declines in the market should not hurt your confidence.
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