Why do world investors not prefer to buy gold in the current period?

While gold has long been considered a safe haven for investors in times of economic and political crises, it seems that this precious metal is no longer the preferred choice for many investors around the world. Current trends in the markets indicate a decline in demand for buying gold, amid the increasing attractiveness of other investment alternatives that offer higher returns or more attractive competitive advantages. What are the reasons that prompted investors to reconsider their investment strategies, and what factors weakened the attractiveness of gold as a store of value? In this report, we review the most important data that contributed to this transformation, with an in-depth analysis of the economic and political variables that play a decisive role in reshaping the global investment map.

Declining gold prices and investor appetite

Investors’ appetite declined after the price of an ounce of gold fell by about $3 to settle at $2,632, according to what the Express Tribune International newspaper reported. Gold prices fell on Friday with the price falling by $10 to $2,635 per ounce including a $20 premium.
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Adnan Agar, director of Interactive Commodities, attributed the price drop to strong employment data in the United States, which usually affects gold prices.
He also noted that the upcoming holiday season in the United States is changing consumer spending patterns.
“Currently, people are eager to seize any buying opportunity during price declines,” Agar said, adding that the lower support level for gold is $2,560 which was last reached in November 2023.

Gold declines for the second week

The American FX Street platform also said that gold prices closed at $2,633.33, recording a decrease of $17.02, or 0.64%, as mixed economic data and cautious Federal Reserve signals affected sentiment.
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This represents the second weekly decline in a row, leaving the metal between key pivot levels that could determine its next directional move.

Support and resistance levels against gold

Gold remains stable near pivotal support and resistance areas between $2663.51 and $2631.04 and a sustained move above $2663.51 would open the door for upside momentum targeting $2721.42 and possibly $2790.17.
Conversely, a drop below $2,631.04 could trigger selling pressure which could push prices towards $2,571.68 and $2,533.76.

Gold and lower interest rates

The US Nonfarm Payrolls report revealed an increase of 227,000 jobs in November, exceeding expectations of 200,000 jobs.
However, weak private job growth paints a more cautious picture for the labor market.
While traders still see a strong possibility of a 25 basis point rate cut at the Fed’s December meeting, Fed Chairman Jerome Powell’s positive economic outlook has cooled hopes for monetary easing and this narrative has weighed on gold’s performance.

Gold fails to rise strongly

Outflows from gold-backed ETFs have continued, indicating lower institutional demand despite geopolitical instability.
Market participants appear to be reluctant to commit and are awaiting clarity from inflation data and Fed guidance. This caution has contributed to gold’s inability to break key levels decisively.

US inflation expectations

CPI data this week is expected to show a 2.7% annual increase. A higher-than-expected inflation figure could strengthen the US dollar and Treasury yields, putting further downward pressure on gold.
However, a lower reading may fuel optimism for additional interest rate cuts, which could push gold higher.
With a Fed meeting also scheduled, these events are likely to spark significant volatility.
Downside risks hang over the precious metal
Bearish sentiment continues to dominate gold trading as gold trades above critical support and a sustained decline below $2,631.04 could initiate a move towards $2,571.68, with deeper declines likely.
However, dovish surprises in the CPI report or Fed comments may provide an opportunity for recovery, pushing prices back to the $2,663.51 level and beyond.