The biggest drop in gold prices in the last 12 years! The reason has been revealed.
Milliyet.com.tr/ÖZEL After falling more than 2 percent to 5,645 TL on Friday last week, the gram gold price recouped its losses on Monday. Reaching 5,900 TL again on Tuesday, the gram gold experienced its biggest drop in recent times.
THE HARDEST DECLINE IN THE LAST 12 YEARS HAS COME
Gold prices fell more than 5 percent on Tuesday. The price of an ounce of gold tested below $4,100, recording its steepest decline since 2013. The price of a gram of gold domestically also fell to 5,400 Turkish Lira.
THE REASON FOR THE HARD LOSS HAS BEEN REVEALED!
So, what was the reason for the sharp decline in gold prices? Will the decline continue? What is the new target for gram gold, which has reached 5,400 TL? Belgin Maviş, Founding Partner of BLG Financial Consulting, commented on all the curious about the subject to milliyet.com.tr: “We saw sharp losses in gold. The over 5% depreciation in the ounce of gold also led to selling on the gram gold market. Silver prices also fell by up to 7% on Tuesday. So, what is the reason for the decline? Trump's softening of his remarks on China and his clear statements about meeting with Chinese leader Xi Jinping in South Korea and reaching a fair agreement appear to have led to profit-taking on the gold market. This is seen not only in gold but also in precious metals.
Although this is the main reason in the picture, when we look at the reason behind it, in my opinion, the biggest factor is the dollar index reaching the 99 limit and the dollar/yen parity falling below 152 and falling back to 151 levels.
With Japan's first female prime minister receiving a vote of confidence and optimistic expectations that she will gain support from the lower house of Japan's parliament, we saw profit-taking in the yen. We also saw the dollar appreciate against the yen and the euro, both of which are putting pressure on gold.
WILL THE DECLINE IN GOLD CONTINUE?
We may see a pullback for a while longer. We need to monitor the dollar index here. Any rise in the dollar index towards the 99.50-100 level could accelerate the pullback.
The key factor here will be the US inflation figures to be released on Friday. The expectation is 3.1%. We'll see if inflation below this level will support gold, or if the Fed is expected to cut interest rates by 25 basis points. If there are questions about whether a more radical rate hike is possible, this will continue to weigh on gold.
NEW PREDICTION FOR GRAM GOLD REACHING 5,500 TL
We need to monitor the movement of the gram gold price on the ounce side. If there's a pullback in the ounce price, we'll see a decline in the gram price as well. A pullback below 5,600 TL, then towards 5,300 TL and then 5,000 TL, becomes likely. The parameter we'll be looking at here is the euro/dollar pair. We'll need to look for a drop below 1.16 in the euro/dollar pair and a drop below 150 in the dollar/yen pair.
'IT WILL BRING NEW PURCHASING OPPORTUNITIES'
The US government is under lockdown, with inflation data due on Friday 20 days behind schedule. We will be awaiting the Fed's interest rate decision on October 29th. If all of these factors, including a Fed rate cut and the possibility of a fair agreement between China and the US, materialize, this could lead to normalization for markets and sustain the sell-off in safe-haven silver and gold for some time to come.
While the decline in tensions has limited the demand for gold, central banks' continued gold purchases and the inflow of funds into ETFs during the 2025-2026 period appear poised to continue. Therefore, the anticipated realization of gold prices will bring new buying opportunities.
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