For most investors latest gold price is one of the most anticipated and most awaited news of the day. As gold price shows a now so good performance in the past few days, some investors view this as a negative sign for gold and thus lose attraction for gold. But today gold has proven that despite trending along risky assets it is capable of reversing the trend.
Gold Price Goes Up as Economic Conditions Worsen helps rekindles investor’s attraction to gold. Plus with a higher rate of unemployment, everybody is now expecting another boost in the paper currency in the form of quantitative erasing.
Here is a portion of Dow Jones article to give us authority’s interpretation about the current economic condition, in relation with precious metal’s future.
Gold Price Goes Up as Economic Conditions Worsen
Gold prices have roared to a three-week high on speculation of fresh monetary stimulus triggered by a disappointing US monthly employment reading.
The most actively traded contract, for August delivery, rose $US57.90, or 3.7 per cent, to settle at $US1622.10 a troy ounce on the Comex division of the New York Mercantile Exchange.
June-delivery gold, the front-month contract, settled up $US57.90, or 3.7 per cent, at $US1620.50 a troy ounce.
The unemployment rate, obtained by a separate survey of US households, rose to 8.2 per cent in May from 8.1 per cent in April, the first increase in nearly a year.
Gold bugs celebrated the sour jobs data, catapulting prices up nearly $US60 at one point and helping gold end at a three-week high.
“People feel that after this number, more money printing is coming,” said Matt Zeman, head of trading at Kingsview Financial.
Employment is a key consideration for monetary policy decisions at the Federal Reserve, and many gold-market participants have been hoping that weakness in the labour market would usher in another round of stimulus measures from the bank.
Gold prices have rallied on past accommodation efforts. Investors tend to flock to gold on fears that excess liquidity would erode the value of the US dollar and spark inflation. Gold is widely considered a hedge against inflation and a store of value.
“While inflation is not now apparent, stimulus that may result from this turmoil is not far away,” said George Gero, vice president at RBC Capital Global Futures.
Gold’s rally intensified in the final half-hour of trade, with futures setting fresh records as investors streamed into the market.
Gold’s gains were amplified by investors who had bet on lower prices, or shorted gold, who were forced to return to the market as buyers in order to reverse those positions.
If you want to read more of Dow Jones‘s article, click here.
As unemployment increases investor’s fear for their asset’s safety, gold still remains as the best hedge against inflation and the best safe haven investment.
Gold Price Goes Up as Economic Conditions Worsen is just a clear indication that gold and other precious metal investments is still the best hedge against worsening economic conditions. Though there may be some who seems convincing about their prediction that gold is in a bubble, and that sooner or later it will explode and leave investors bankrupt, but practicality as base from current events their assumptions are pure hearsay without solid foundation.