Global Market Fluctuations Boost Gold Prices

May 28, 2012 - by buygold.co.uk · Filed Under Gold News Leave a Comment

The uncertainty in global markets is rebooting the demand for precious metals with gold leading from the front. Investors should take note that while prices of this metal have begun to go up, they have not yet reached unaffordable heights. This presents a great opportunity to buy gold as an investment right now.

End of Bullish Trends

The market enjoyed some bullish trends for the last couple of weeks. A return of risk appetite was witnessed with investors turning towards equities after a long hiatus. However this situation did not last long at all. In the wake of former Greek PM Papademos’s statement indicating that his country may soon withdraw from the Euro, the market sentiments are quite subdued.

Investors are thinking twice before taking on exposure to any assets except the safest ones. Considering that gold has proved itself a strong store of value and that it is universally saleable, it is only understandable that demand for this precious metal is on the increase now.

World Bank Cuts Growth Estimates for Asian Economies

Add to this, the fact that the World Bank has predicted a fall in the growth rate of developing Asian economies and you can see why safe haven assets are once more in the spotlight. China’s growth forecast has been brought down to 8.2% from the previous 8.4% predicted growth for 2012. Japan’s economy appears to be floundering with the BoJ deliberating whether a stimulus will give the necessary boost to avoid a possible recessive trend.

Among the European countries, other than Germany none of the Eurozone nations have good news to share regarding their economic growth or stability. With Italy, Britain and others already entrenched in a double dip recession, it is clear that dramatic improvements cannot be expected from any economy here.

The U.S. dollar is the only currency which appears to be holding its own as of now. But given the political uncertainties there, it is not possible to confirm that the dollar will regain its position of power soon.

All of these factors affecting global economies are playing their part in ensuring that investors remain cautious with their money. This caution is what is propelling more buyers into investing in gold.

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