Gold has hit its worst weekly loss since 1983 this week. it has dropped by about 11%. I referred to the high possibility of correction from the $5000 highs early this year in this interview. That theory was premised on possible liquidations led by Central Banks worldwide as the need for liquidity bites and possible …
Why gold has hit its worst weekly drop in prices since 1983 and why investors should hold steady
Gold has hit its worst weekly loss since 1983 this week. it has dropped by about 11%. I referred to the high possibility of correction from the $5000 highs early this year in this interview.
That theory was premised on possible liquidations led by Central Banks worldwide as the need for liquidity bites and possible improved geo-political environment driven perhaps by trade deals.
The US/Israel/Iran war should have in theory led to to a rise in gold price as inflation fears and high oil price usually lead to investors flocking to gold as a safe haven.
However we are seeing the inverse as inflation fears is leading to the possibility of the US Fed increasing rates or at least keeping them steady.
The higher rates is leading to hedge funds and investors liquidating gold positions for the US dollar / bonds on the appeal of higher yields.
What some watchers missed was the fact that, investors move to gold among all the identified factors was the FED reducing rates three times this year alone sparking greater investments in the shiny metal.
The rebounding of the US dollar in march is making gold more expensive to buy for international investors including central banks which was one of the factors i gave in my interview as a possible factor for correction. Gold thrives under a regime of a weaker dollar.
Why Investors can still hold steady
1. The global uncertainties which affected the surge in gold price still remains.
2. The recent announcement by the US that it could be winding down activities in Iran may reduce inflation fears and ultimately lead a US rate reduction.
3. gold above $3000 an ounce is still phenomenal and despite the drop has gained circa 65% in 2025. The long term view of gold as a reserve asset remains unchanged.
4. As per my initial interview, correction is bound to happen and rebalancing of portfolios by central banks and hedge funds may lead to sell offs. But i expect gold to still be around the $4500 -$ 5200 an ounce cetrius paribus over the medium term which still provides phenomenal return.
