Few people would argue that economic fear has a powerful effect on gold prices, as many investors revert to physical precious metals holdings to protect their wealth during long periods of economic upheaval, and the subsequent fear that it perpetuates. This gravitation toward precious metals investing creates an increased demand, and consequently, higher gold prices, while the value of the printed currency that gold backs adjusts to interest rate manipulations, and inflation. For these reasons, savvy gold investors closely survey indicators like dollar values (which historically move oppositely to gold prices), as well as various global economic developments to aid their strategy.
For example, consumer prices for the month of January weren’t as bad as many had feared, and our Federal Reserve has yet to raise interest rates. This momentary reassurance has helped to boost the gold spot price above the $1,125 per troy-ounce resistance level, as some investors initially feared that the Fed would raise interest rates sooner than expected. What’s more, Chinese markets were closed all of last week because of the Lunar New Year celebration, which historically prompts more gold buying. Now that markets are again open in China, demand for gold will greatly affect whether the spot price will remain above $1125, or decline to lower levels.
The gold spot price was at $1115.20 per troy-ounce at around 1:30 EST, after reaching a low of $1111.30, earlier Monday morning. Those with questions over gold’s spot price fluctuations are encouraged to contact one of our friendly specialists, who offer world-class consultation on precious metals investing, as well as institutional discounts on gold bullion, and certified rare gold coin.
Ronald Stevens
Tags: Gold Prices
