Gold Prices Increase In Spite of Global Economic Concerns

August 20, 2012 - by buygold.co.uk · Filed Under Gold News Leave a Comment

Although there has been no respite for the investors from the current economic crisis, gold was traded at increasingly higher prices in the second week of August. Investors were unsure about how their prospects would change, and this was evident by the fact that trading volumes were significantly lower from 6th to 11th of August, compared to a normal day at the bullion market.

There was no clear information about whether central banks would provide the necessary monetary stimulus for the economies to make through this crisis unscathed. But the damage to the Euro zone will definitely have a lasting impact on gold prices and it is unlikely that there will be a major swing in the condition in the near future.

Rally Enthuses Markets but Profits are Temporary

After the European Central Bank (ECB) announced through a rally that they would actively support and provide relief to the ongoing crisis, the market responded with a bull run in the gold prices. But those gains were short-lived as there was not any action from the part of bank. The ECB’s announcement that the monetary stimulus would ease the borrowing costs of the Euro zone countries remained a statement and the investors were hopeful that the promised monetary stimulus will materialize in the near future.

Further Currency Printing Deemed Impossible

When bullion investors were hoping that they would not have to face any more worries for the rest of this week, they were given a further shock by the Bank of England. In the second week of August, governor Mervyn King ruled out any chance of more currency being printed, as the central bank ceased the support it was granting to the economy of the United Kingdom.

Anticipating Action from Federal Reserve and ECB

Gold bounced back after a few bleak sessions in the previous week but there has not been any significant improvement over the past couple of days. The range of mobility of gold prices has been pretty tight as investors are still looking forward to some sort of tangible action either from the European Central Bank, the Federal Reserve or both.

Be Sociable, Share!