If you’re looking forward to investing in gold, you might be pleased to know that it is set to post a weekly gain once again. However, gold fell on Friday as the dollar evened out. The price of gold had jumped on Thursday to $1,219.40 in response to attacks in Yemen. This was the highest it had been since March 2. Spot gold lightened .5% to $1,198/ounce, while U.S. gold futures for April sat at $1,199.80/ounce. The price of gold typically responds to conflict, rising in the face of strife because of its inherent stability. As of Friday gold was close to finishing the week up just over 1 percent. This has been gold’s longest positive stretch since August of 2012. There are three other reasons that the price of gold has been so high as of late. One is the uncertainty of the Federal Reserve’s monetary policy. As they move towards normalizing their monetary policy and raising interest rates, the price of gold fluctuates. If the interest rate remains low the value of gold increases. But It is anticipated that an increase in interest rate for gold might lead to less demand for investing in gold. Another reason the price of gold had been remaining high was the questionable future of the Euro because of quantitative easing of the European Central Bank. Once again people tend to plan for a future in which paper money takes a back seat to gold. Finally, the Chinese economy is encountering problems, which in turn effects the global economy, causing people to feel bullish toward the gold market. Some are still cautious over the increase in gold price, as the world’s biggest gold-backed exchange traded fund SPDR Gold Trust recorded a loss of nearly 6 tonnes to 737.24 on Thursday, the lowest level since January.
It is anticipated that with an increase in U.S. interest rates expected soon, the price of gold will continue to fall; this isn’t an unreasonable supposition since economic and financial improvements reduce the demand for gold and other “safety nets.” However, some economists argue that more than 40% of the demand for gold last year came from Asia, making United States monetary policy unimportant in the price of gold. They believe that the Asian market demand will pick up at some point this year, reflecting numbers that repeat those of last year. The process for pricing gold was forever altered on March 19. For the first time in 96 years gold prices weren’t set by a select few sitting in a quiet back room, but by an online auction that anyone could participate in. It is hard to tell what impact the process change will have in regards to the going rate of gold, but since 2011 gold prices have fallen 37%, even as those investing in gold notice the price still increasing. This seems to indicate that despite global finances, the U.S. economy is growing stronger. As this trend continues, gold’s upward trend will certainly slow down.
