Many people want to buy gold, but many also wait for the right moment to take the plunge. Is there a really good time to buy gold? Why does the price of gold fluctuate so much?
Why does the price of gold fluctuate?
You are aware that the price of gold depends on the price of gold set in London by the LBMA ( London Bullion Market Association ). The latter changes several times a day and fluctuates enormously for several reasons. The fluctuation in the price of gold means that its price often goes down and up.
Indeed, the yellow metal being quite coveted, these fluctuations are mainly governed by the law of supply and demand. But this is not the only reason why its price changes because the price of gold is also influenced by global geopolitics, i.e. world events, can impact stock markets and the world economy. . Therefore, it is important to know that the price of gold has a countercyclical aspect: that is to say that it works in opposition to the market on the world stock exchanges. This means that when the markets are in crisis, the price of gold goes up, and vice versa. Take as an example the Covid-19 health crisis, which is a current geopolitical event. The latter completely impacted the global economy in the wrong direction and as a result, the price of gold exploded in August 2020 and played its role as a safe haven more than ever.
When is the best time to buy gold?
As said previously, gold is a safe haven: this precious metal, therefore, has more interest as a savings value and is ultimately not very suitable for speculative practices. It is for this reason that there are no good times per se to buy gold.
Certainly, its price fluctuates, and it is normal to always want to buy it at its lowest price. But given the geopolitical context and other reasons that influence the price of gold, we cannot know in advance whether its price will fall or rise in the coming days. But one thing is certain, saving in the yellow metal allows you to protect part of your savings from inflation thanks to its safe haven. In addition, we notice over the thirty years that its price is higher than 30 or 20 years ago, and proves that gold is an investment that can pay off in the long term.
It is in this logic that professional investors advise investing in gold often and in small quantities. In this way, you limit the impact of the fluctuation in the price of gold, since the downtrends in gold will offset the uptrends.
Investing in gold allows you to build savings little by little, and is the best way to diversify your investments. The security of the yellow metal could compensate for the possible loss of other more volatile investments. And thus, offers the possibility of securing one’s savings in the face of inflation and global economic uncertainties.
