However, it can't be completely said that the gold plunge is due to the epidemic, because the impact of the epidemic on the economy is actually the fundamental support for raising the price of gold.
However, it can't be completely said that the sharp drop of gold has nothing to do with the epidemic, because the decline of global capital prices caused by the epidemic, especially the melting of US stocks, is the direct reason for the decline of gold prices.
Under the influence of the epidemic, the upward trend of gold was determined.
We know that the price of gold is negatively related to the economic trend. When the economy is affected by the downward trend, the price of gold often starts to rise.
On the other hand, the loose monetary cycle of the central bank increases the liquidity of the currency and can also boost the price of gold.
Under the impact of the epidemic, both were established at the same time.
Since 20 19, the price of gold has been on the rise because the downward trend of the global economy has gradually become clear.
After the epidemic, there was an economic crisis around the world, and central banks generally introduced monetary easing policies in response to the economic crisis, so the price of gold itself was affected by the epidemic and entered a relatively certain rise, which was obvious in the rebound after gold fell to the bottom.
The decline in the price of gold is more due to the fluctuation of financial markets.
Since the economic downturn itself is good for gold, why has the price of gold dropped so obviously?
We can see that after the epidemic began to spread and the United States declared a state of emergency, the price of gold actually rose, even reaching a high of $65438+$0.700.
However, after the US stock market 1 melted, the price of gold fell rapidly. The reason here is simple.
Before this epidemic, the American stock market had entered a period of continuous bubble expansion, and the risk and valuation were increasing, so it fell rapidly under the impact of the epidemic and created a record of four consecutive fuses.
Before the US stock market rose, financial institutions generally participated in too much and leveraged. Therefore, the rapid decline of US stocks makes the margin accounts of many financial institutions face the risk of being broken down. Coupled with the pressure of fund redemption at the end of the bull market, these financial institutions generally need a lot of cash flow to maintain their margin accounts.
Under this pressure, a large number of financial institutions sell all their assets in exchange for cash. At this time, gold has risen and fallen with US stocks. As long as US stocks fall and cash liquidity is under pressure, gold will be sold off.
There is still room for gold to rise in the future.
In the face of the continuous decline of US stocks, the Fed quickly took measures to prevent cross-default in the debt market, including the so-called unlimited easing, allowing the Fed to unconditionally accept all risky assets in the market as collateral.
In this case, gold decoupled from the US stock market and then rebounded sharply. At the time of writing this answer, the highest price of gold once exceeded $65,438 +0.785, and now it continues to fluctuate above $65,438 +0.700.
However, the world economy is far from bottoming out. Judging from the high-frequency economic data of the United States, although the rate of economic decline in the United States has slowed down, its own rate of decline continues. In addition, central banks are still releasing liquidity, so the upward trend of gold price is far from over, and there is still a lot of room for gold in the future.