The Gold Price This Week Reminds Us Why We Own It

Jun 27, 2024, 10:45 AM EDT

Both gold and silver have been under some pressure this week. Both have seen some light volatility with gold finding critical support around $2,300, and silver dropping to below $29 on Tuesday. Much of this is down to strength in the US dollar and rising US Treasury Yields. For now, both metals appear to be in a narrow trading range and quite directionless.

Weeks like this might feel frustrating for gold investors, or maybe a bit boring. But in today’s video Jan Skoyles reminds us that that’s why we like it. Whilst many people wonder if they should buy gold because it will make them rich, the majority of people buy it because of its low volatility and role as a safe haven. Jan explores this and outlines why having gold as part of a balanced portfolio not only helps you to take risks, but also works to soften the landing when other investments don’t perform so well. 

Right now, there is some serious concern in Japan about the Yen’s rapid devaluation which has not been helped by the Bank of Japan’s (BOJ) decision to maintain its low-interest-rate policy and bond-buying stimulus until July. As Jan refers to in the video, you’d be pretty pleased if you owned gold when your own currency is experiencing such a devaluation. In the last 6 months the gold price has climbed over 25% when priced in Japanese Yen, compared to 11% when priced in US Dollars. Not only does it perform well in such scenarios but you know that your gold will be accepted anywhere, which might not always be the case for printed money. 

Elsewhere we continue to look at central banks and what their plans are. We know that many plan to continue to buy gold, but what of others’ plans in terms of monetary policy? Earlier this week statements from two Fed officials helped to contribute market sentiment around gold. Both Fed Governor Lisa Cook and Fed Governor Michelle Bowman failed to give any indication of rate cuts from the Fed. Bowman even suggested a rate hike might need to be considered. 

As ever we continue to watch events with interest, comfortable in the knowledge that gold is doing exactly what it’s supposed to do. As ever, let us know your thoughts – where do you expect gold to finish this year? And will silver head back up over $30 any time soon?

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