Will gold prices continue to fall?

The last couple of months have seen the price of gold drop alarmingly and certainly its biggest downturn in recent times. Many traders will be wondering if this is a temporary blip or something more long term to take note of. Often seen as the ultimate safe commodity, just what has happened to precious metals in the last few months?

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Inflation Hurts Gold Values

One of the key factors in the fortunes of this commodity has been the inflation data coming out of the US and UK markets. As these inflation numbers rise, the price of gold on the exchange will in turn fall as a reaction. In the UK, for example, August 2017 inflation figures were at 2.8% which is just under the yearly high of 2.9% back in May.

While the markets did not seem to anticipate the Bank of England attempting to hike up rates this year, it seems likely that 2018 will see them tightening up somewhat in this area.

US Outlook Similar

Over in the US, the factory-gate price growth has contributed along with the UK data to hurt gold further. Hitting 2.5%, this was the first growth in four months and the highest since April. This naturally led to a more positive sentiment around the US economy and a flow of money out of a safe-haven such as gold.

Indeed, if the Fed decides to take these figures as a hint to tighten, then the prospects for precious metals such as gold may worsen. Any firm growth data that is released will certainly not be welcome news for gold.

Although many may be surprised by the recent fall in gold prices, an analysis of the recent market sentiment and economic data should highlight that it was to be expected.

Whether this will reverse or the current economic trends within the UK and US will see more gold losses is hard to predict with any certainty at this moment in time. Many savvy traders will be keeping a close eye on figures such as the CPI data for each country when they are released and will use these to inform their position in relation to gold.

Trading Binary Options

Falling prices can still be profitable with a well timed binary option. Either longer term options, or short term options traded around news events or statistic releases, can both yield high returns.

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