Gold remains in a tough spot. The gold price was beaten down hard this year and it fell through its 1,180 USD technical support level not too long ago. That triggered a lot of sell orders and could put further downward pressure on the yellow precious metal.
Some analysts are amazed by the beating that gold (and silver) has gotten. At first sight there are plenty of reasons, namely, to justify a higher gold price. The world is definitely not a safer place and does not look like that is about to change soon.
The international economy is confronted with different geopolitical risks. The situation in Ukraine is mostly a threat to the developments in the Eurozone, but PIMCO estimates that the odds are low that it will escalate to the level of Iran.
The Gold Price No Longer Responds To Geopolitics
The crisis in the Middle East does not have a big impact on the global economy, but the increasing tension between China and Japan cannot be ignored as a political risk. China is a superpower and it is showing off its strength, according to PIMCO.
All these risks warrant an increase in the gold price, but that is no longer how the world works. Gold does not respond to geopolitics anymore; not since the first Gulf War. The gold price only went up for a few hours then, only to fall back into apathy. The absence of a geopolitical response in the gold price is holding it back now as well.
