Individuals who want to make money by trading gold might benefit from knowing about how the precious metal depreciated in response to news that Iran made an agreement to cut back on its nuclear program.
The price of the commodity dropped more than 1 percent on Nov. 25, as market participants were impacted by the announcement that Iran had reached a resolution of sorts with several major nations, MarketWatch reported.
Gold plunges to lowest in more than four months
Spot gold dropped to $1,227.54 an ounce during the trading session, according to Reuters. This represented a decline of 1.2 percent for the day, and the contract fell to its lowest value since July 8. By 10:56 GMT, spot gold had risen to $1,231.66 per ounce.
After several days of talks in Geneva, Iran indicated that, in exchange for the relaxation of certain economic sanctions, it would curb its nuclear activities, according to Bloomberg. This development helped to lessen the risk aversion of many global market participants, which therefore motivated them to flee gold and instead seek assets such as equities that are considered to be more risky.
Individuals who want to make money trading gold might benefit from knowing about the impact that the latest progress in the Iran situation had on the price of the precious metal, and how these developments illustrate how major news events can lower the risk-aversion of market participants. Such a change in sentiment is generally considered bearish for gold, as the commodity has long been thought of as a safe-haven asset.
Expert: Investors lack incentive to buy gold
Jonathan Barratt, chief executive officer of Barratt’s Bulletin, told the news that the latest news has not given market participants a good reason to buy gold.
“A lot of the risk premium, the safe haven status that gold has, the reason that people bought gold is not there,” the market expert told the news source. “You can certainly see that in developments in the Middle East as well. We’re losing a lot of the riskier concerns out there and as a result, many people are revising their portfolio. It’s evidenced by the draw in the ETF market.”
In addition to the downward pressure that gold has received because of the latest progress in the Iran situation, recent data provided by the U.S. Commodity Futures Trading Commission revealed that in recent weeks, hedge funds have become highly bearish about the future of gold, according to MarketWatch. Such bets could push the metal even lower in value. This information could also be helpful for people who want to make money trading gold.
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