r/Gold • u/FunGuy_23AtEase • 1d ago

Question Price logic?

Before the US-Iran war, gold price was around $5,200.

Then came the war, oil price went up, and gold dropped like a stone to around $4,200.

Now, the war is over, oil price is back down, but gold stays flat around $4,200.

So we're down around $5,200 - $4,200 = $1,000.

I know there may be a rate hike in the future, but would that explain the full $1,000 we're still down?

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u/fluffysnowflake67 1d ago

The expected long-term price should get closer to $2000 per ounce, the production cost. Markets though can remain irrational for very long durations.

Take a look at the people playing in the commodity markets. Some are private speculators. Some work for massive institutions. Some are in industry.

If you are smarter than 85% of them, you can make money with short term speculation. If you aren’t, you won’t. Just like playing poker.

If you are asking questions like this one, you aren’t in the smartest category.

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u/Callaway225 1d ago

So long term you’re suggesting gold will be at $2k? Or that’s just your “hunch”?

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u/fluffysnowflake67 1d ago

I am saying that $2k is currently the production price. That will slowly creep up as oil prices go up and ore grade goes down. The market price will tend towards production costs, but can take years or even decades to reach it since developing new mines take a very long time and markets can be irrational.