Gold Rally Because Of Fomo

last updated on

Gold Rally Because Of Fomo

Gold Rally Driven By Investor Fomo

According to a senior strategist from TDS, the rally in Gold is mostly driven by FOMO. So, they are saying that the rally lacks substance, and it is mostly because of the investor's fear of missing out.

TDS added that the surge in Gold was not backed by many fundamental drivers. In fact, the real rates have increased, and the US Dollar has not declined to new lows. In addition, the Gold demand from central banks like China and BRICS+ has also not increased.

Gold Etfs At Record High Levels

While there's no catalyst, the Gold prices are at an all-time high, and so is the Gold-based ETF. So based on all of this, it does feel like more investors are now buying gold because of the fear of missing out.

TDS noted that the demand from central banks has actually declined in the last few months. In addition, the US Dollar is holding steady, and the real rates are actually rising instead of declining. So, it is clear that Gold is now under-owned but not overbought.

If we look at the overall gold purchases by central banks, the share of BRICS+ is very small. Meanwhile, China is still not buying Gold for some reason, but experts believe that it has to do with higher prices.

While the central banks have lowered their purchases, the retail participation in Gold ETFs is at record highs. TDS also highlighted that the rally in Gold is mostly driven by Western investors.

Since the rally is driven by FOMO, we all know how that ends. So, there's a good chance that we might see a healthy correction in the Gold prices as it is not backed by any fundamentals.

But any unexpected geopolitical event or something of extreme importance could provide a base for Gold to sustain its prices.

Trending Stories