When is it appropriate to buy gold at the bottom?
Previously, every time international oil prices surged, gold was in a declining state. Especially since the changes in the Middle East situation, it has been quite unbelievable for everyone that the past safe-haven tool of gold suddenly became ineffective.
As the situation has become increasingly obvious, the decline in gold prices has been more intense. Just look at the New York gold futures, which dropped from a previous $5,500 to a low of $4,100 this time around. The strength of this decline is quite fierce.
I estimate that most people have not figured out this reasoning: why does a change in regional conditions lead to a significant drop in gold? The core reason is still a liquidity issue, meaning that in special periods, in order to obtain liquidity, gold is sold off to obtain local currency or foreign exchange.
Turkey is a typical example, as it reduced 6 tons in the week of March 13 and then reduced another 52.4 tons in the week of March 20, which impacted global gold prices.
I believe that if the Middle East situation continues, it may also trigger a sell-off of gold. In the future, as time goes on, in order to obtain liquidity, the sell-off of gold should not just involve Turkey alone; more economies will join in. From this perspective, the current gold price has reached $4,400, down $1,000 from the previous high. Is this position low enough?
I think we shouldn't define this matter too early; let the bullets fly a bit longer. Until the situation in the Middle East stabilizes completely, it's relatively difficult for gold to attract new buyers. In other words, even at the current $4,400, it is still hard to say that it is at a low position. We should observe the external environment more before making conclusions. Once the situation stabilizes completely, or calms down, we will then reassess the investment value of gold. $ETH
