Gold Prices Soar To a Two Week High
With speculations that central banks might take some action to influence growth, gold prices soared to a two week high.
The prices had surprisingly dropped as investors looked to focus more on maintaining their liquidity rather than owning assets. The prices rose by 1.5% and were at $1621.80 per ounce, as of 1.41 pm, June 3, on Comex, New York. The predictions are also good for the precious metal as people are again starting to look at gold as a safe haven for investment.
The prices were also assisted by some buying of inflation-hedges. The buying was triggered by the variations in the crude oil prices because of the tension on nuclear program of Iran. The inflation of grain prices also played its part as people started to fear a shortage in the supply due to the United States Mid-West droughts.
Positive signs from US and Eurozone
Trading experts pointed out that people were becoming more active about gold, now that there are some positive signs from the United States and the Euro zone. The head dealer at Integrated Brokerage Services in Chicago, Frank McGhee, was of the opinion that people are noticing the signs of relief that the US and Europe are showing. He said it was just the chatter, which was causing this surge in prices and if the signs continue, we can expect a further bull in the prices.
The US economy also showed signs of slowing, which necessitated the influx of monetary resources by its aides. This was another cause for the rise in gold prices, which was witnessed during the 2008 to 2011 period. The Federal Reserve had borrowed close to $2.3 trillion for the supposed quantitative easing. The borrowing costs were also at an all time low, causing gold prices to soar by a record 70%. This was just over a period of 4 years.
Some experts were of the opinion that this slowdown might mean another bull run for gold prices as there will be more monetary stimulus required. Chief commodity analyst from HSBC, James Steel said that the gold will have a boost rally depending on the influx of money to balance the fragile economy.