Whether gold is a good investment or not depends heavily on the gold price. In the first six months of this year, the gold price had risen significantly. In the beginning of this year $ 1060 per ounce was paid; in May, the price surpassed $ 1300 mark. However, the price of one ounce of gold dropped below the psychological barrier of $ 1300 last week after consecutive trading days of gold losing ground. The gold was $ 40 per ounce cheaper in London and fell to $ 1270, its lowest level in more than three months since the Brexit on June 24th.
The traditional enemies of gold are doing well on the stock market. Economic data from the US remain positive and increase the chance of a rate hike. This is why the dollar rises which has an influence on the gold price and on the question of whether it is a good investment or not. Rate hikes make gold less attractive to investors because it yields no interest. Some reactions of two directors of the US Central Bank (FED), which should provide a favorable monetary policy in the United States, fueled speculation about a future rate hike. According to FED-director Loretta Mester, arguments for a rate hike at the meeting of November 2 will be decisive. Two weeks ago, she already voted in favor of a rate hike. Director Jeffrey Lacker, who has no right to vote this year, argued for a tighter monetary policy to prevent a rise in inflation too.
On the other hand, the stock market continues to perform well, which makes an investment in gold as an alternative route less needed. Investors massively dumped gold, which caused the precious metal to fall below the limit of $ 1300 per ounce.