Gold will fall below $1800

Recently, there has been a flurry of news about large global institutions and funds continuously buying gold. Not long ago, the renowned investment bank Goldman Sachs even predicted that by the end of the year, the price of gold could rise to $2,500 per ounce.

Such a significant increase and profit potential, isn't it very attractive?

However, for ordinary investors, it is essential to be aware of the risks associated with the continuous decline in gold prices.

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Apart from a brief period when the international gold price surged close to $2,100 due to European conflicts, it has been in a slow decline. Today's lowest price during the trading session was $1,809, and it seems that in the coming days, it will break through the $1,800 threshold.

Due to the fact that the inflation data in the United States did not slow down in April, more buying orders have poured into the dollar, pushing the US Dollar Index higher. In turn, this has dragged gold down to a new multi-month low.

Although there has been a short-term rebound in gold prices, they are still in a bearish pattern, and the downward trend may further expand.

Some analysts believe that if the gold price breaks below $1,828, the bearish targets will shift to around $1,810 per ounce, and today's trading has already broken through this level.

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The upper limit for gold's rebound will be between $1,858 per ounce. Breaking through this resistance line could open the door for gold prices to rise above $1,900 per ounce. However, at present, the challenge is not small.Many ordinary investors might find it puzzling why the news they hear in the market is all about buying gold. Recently, a report on the internet showed that in the first quarter of this year, the Central Bank of Egypt bought 44 tons of gold, and gold now accounts for 17% of the foreign exchange reserves of the Central Bank of Egypt. In addition to central banks buying gold, many institutions are also purchasing it. In the first four months of this year, the world's gold ETFs saw a significant inflow every month, and the current holdings have reached nearly 3900 tons.

Moreover, at the end of April, a report published by the international investment bank Goldman Sachs pointed out that by the end of 2022, the price of gold could reach more than $2,500 per ounce. The investment demand of ordinary families and the continuous purchases by central banks are the main reasons for the continuous rise in gold prices.

However, everyone must pay attention that ordinary investors and central banks have different attitudes towards gold. Ordinary investors focus more on the investment value of gold. In times of market turbulence and weak economic expectations, choosing safe-haven assets is an important way to preserve and increase investment returns. In this regard, gold has unique characteristics of scarcity and security, and it has a strong safe-haven attribute.

Investors who pursue stable returns can consider bank physical gold, gold asset management products, and gold ETFs as relatively ideal investment targets. For other investors, they can take advantage of the counter-cyclical nature of gold. In the case of significant fluctuations in investment products such as stocks and bonds, by combining with gold assets, they can reduce the uncertainty of investment, which is also a more conservative investment. Gold, as a safe-haven tool, has seen an increase in financial derivative products based on it in market investment portfolios.

In addition, a considerable amount of funds are currently flowing into gold for short-term safe-haven purposes, rather than for medium to long-term investment.Gold possesses a strong "safe-haven" capability due to its unique commodity attributes, investment characteristics, and monetary properties, which endow it with relatively good returns and risk-avoidance capabilities.

Affected by an increase in global unstable and uncertain factors, international situations such as the Russia-Ukraine conflict, the COVID-19 pandemic, the acceleration of capital allocation to safe-haven assets, and the weakening expectations for world economic development, the financial market's demand for gold as an alternative safe-haven asset is likely to continue to rise.

If future "black swan" and "gray rhino" events continue to emerge, and under unfavorable factors such as unresolved European conflicts and the COVID-19 pandemic, gold often becomes an important asset to combat inflation and achieve value preservation and appreciation, with the price level of gold likely to remain at a high position.

However, in the long term, compared to valuable securities such as stocks and bonds, the return on gold is significantly lower, making it clearly not an appropriate long-term investment product.

The purchasing behavior of central banks is not solely for investment appreciation; it is more about asset allocation and considerations for stabilizing monetary credit.

Different demands naturally lead to different buying and selling behaviors.